G-7 Said to Be Concerned About Excess Yen Moves

The Group of Seven is concerned about excessive moves in the Japanese yen, an official from a G-7 nation said, adding that investors misinterpreted an earlier statement on exchange rates.

The clarification spurred gains in the yen and came just hours after the world’s major industrial economies appeared to signal acceptance of a weaker Japanese currency so long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.

The G-7’s statement — which said nations “will not target exchange rates” — was crafted to highlight concern about Japan giving guidance on the yen, and the country will be in the spotlight when Group of 20 policy makers meet in Moscow in three days, the official said on condition of anonymity.

“The apparent volte face is a shock to all who read this morning’s statement as a green light to Japan to reflate its economy as long as measures did not directly involve targeting the yen,” said Gavin Friend, a foreign exchange strategist at National Australia Bank Ltd. in London. “Aside from the fact the G-7 has added to volatility and caused a sharp move higher in the yen, this won’t help Japan’s cause.”

The yen jumped versus the dollar, rising 1.3 percent to 93.07 per dollar at 11 a.m. in New York. It had previously pared gains as investors concluded the G-7 wasn’t standing in the way of a yen decline so long it was only a by-product of Abe’s effort to revive his economy through monetary stimulus.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell