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Group of Seven makes currency pledge

Feb. 12, 2013 at 2:29 PM   |   Comments

LONDON, Feb. 12 (UPI) -- The Group of Seven nations, all economic powerhouses, pledged Tuesday to coordinate policies to avoid government interference in currency rates.

A statement posted on the website of the Bank of England said the group "reaffirm[s] that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates."

Part of the problem in the international community is that domestic policy can affect -- inadvertent or intentionally -- exchange rates, giving exporters a quick advantage if their currency's value goes down.

Venezuela recently announced it would devalue its currency 32 percent in an attempt to close a budget deficit. While that makes its exports cheaper to foreign countries, it also makes imports more expensive, which undercuts exports businesses that send goods to Venezuela.

The U.S. Federal Reserve in recent years has initiated several rounds of quantitative easing, meant to stimulate the economy. But the strategy drew quick criticism from other countries, including China and Brazil.

Japan has also been in a spotlight recently, as the yen has lost value sharply since the first of the year, when the new government stepped in which pledges of quantitative easing, a step also called "printing money," as the process -- the government purchasing assets -- puts more currency in circulation, which brings down its value.

The New York Times reported Tuesday that Japan, a member of the Group of Seven, was vindicated by the statement.

The group "properly recognizes that the steps we are taking to beat deflation are not aimed at influencing currency markets," Japanese Finance Minister Taro Aso said.

Besides Japan, the Group of Seven nations includes the United States, Germany, France, Britain, Italy and Canada.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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