U.S., Japan FX row overshadows G7 meeting; leaders eye Brexit threat

Fri May 20, 2016 11:30pm EDT
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* U.S. Lew warns Japan Aso against competitive FX devaluation

* G7 likely to warn of risks from potential "Brexit"

* G7 finance leaders to offer brighter view of global economy

By Leika Kihara and Stanley White

SENDAI, Japan, May 21 (Reuters) - The United States issued a fresh warning to Japan against competitive currency devaluation on Saturday, exposing a rift on exchange-rate policy that overshadowed a Group of 7 finance leaders gathering hosted by the Asian nation.

Japan and the United States are at logger-heads over currency policy with Washington saying Tokyo has no justification to intervene in the market to stem yen gains, given the currency's moves remain "orderly".

In bilateral talks ahead of the second day of G7 talks in Sendai, Japan on Saturday, U.S. Treasury Secretary Jack Lew told Japanese Finance Minister Taro Aso that it was important to refrain from competitive currency devaluation.

"Secretary Lew underscored that the commitments made by the G-20 in Shanghai to use all policy tools to promote growth - fiscal policy, monetary policy and structural reforms - and to refrain from competitive devaluation and communicate closely have helped to contribute to confidence in the global economy in recent months," according to a statement by the Treasury Department.

"He noted the importance of countries continuing to adhere to those commitments," the statement said.   Continued...