Japan, US agree to honor G7, G20 forex commitments

[WASHINGTON] Japanese Finance Minister Taro Aso and US Treasury Secretary Jack Lew on Thursday agreed on the importance of all countries to "honour their G7 and G20 exchange-rate commitments," the Treasury Department said.

The two, who met in Washington on the sidelines of the Group of 20 finance leaders' gathering, also discussed "developments in Japan's macro-economic policies including fiscal measures,"according to a statement issued by the Treasury Department.

The G20 finance leaders agreed in Shanghai in February that countries should refrain from competitive currency devaluations, which some market players interpreted as a warning against Japan for intervening in the currency market to stem sharp yen rises.

The G20 and the Group of Seven advanced economies, however, also agree that excess volatility and disorderly currency moves are undesirable. Japan has said this agreement reserves it the right to step into the market if the yen's spike is out of line with fundamentals.

Bank of Japan Governor Haruhiko Kuroda has also dismissed the view, held by some in the market, that its decision in January to deploy negative interest rates was an attempt to stem an unwelcome yen rise that hurts exports.

A senior US Treasury official said on Tuesday that Washington will keep currency issues on the boil during this week's meetings of the G20 major economies and urge faster progress toward market-driven exchange rates.

REUTERS