February 13, 2013 / 12:06 AM / in 6 years

Canada refuses to say if G7 aimed at Japan on forex

OTTAWA (Reuters) - Canada declined on Tuesday to say whether the Group of Seven (G7) leading industrialized nations had targeted Japan in the group’s statement on foreign exchange rates.

A senior Canadian finance official was asked on a call with reporters whether he endorsed the view that the G7 communique did not aim at any country, or the view it was aimed at Japan. He would only say the communique was meant to strike a balance.

The G7 statement on Tuesday morning, seeking to calm fears of a currency war, committed members to using fiscal and monetary policies for domestic objectives and not to target exchange rates.

The Canadian official said the G7 had decided the statement was necessary to calm the rhetoric about currencies over the past few weeks, which he added had not been helpful, and Canada did not want to add to that noise.

The official was speaking at the end of a day of turmoil on foreign exchange markets, in which Japan interpreted the G7 statement as giving it a green light to pursue reflation, prompting an official from another G7 nation to say that the group was in fact concerned about excess moves in the yen and about unilateral guidance on the yen.

The Canadian official, who declined to be identified or be quoted directly, pointedly refused to say whether Ottawa or the G7 was concerned about excess yen movements.

Outright forex intervention would clearly run counter to the G7 statement, he said, unless there was market disruption or extreme volatility.

Ottawa hopes that the currency discussions will not distract the Group of 20 major economies at the February 15-16 Moscow meeting from other important issues, including the need to strengthen medium-term fiscal commitments, he said.

Canada co-chairs a G20 working group that is looking at moving beyond a commitment made in 2010 to halve fiscal deficits by 2013 — a pledge that have seen big misses, such as in the United States.

Reporting by Randall Palmer, Louise Egan and David Ljunggren; Editing by Andre Grenon and Carol Bishopric

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