The yen weakened for a second day against the euro after Japanese Finance Minister Taro Aso said a statement from the Group-of-Seven nations acknowledged the country isn’t targeting exchange rates with its monetary policy.
The yen erased gains of as much as 0.5 percent versus the dollar as the release of the G-7 statement damped speculation the major industrial nations would indirectly criticize Japan for introducing measures that weakened its currency. The euro rose versus all except two of its 16 major counterparts after Luxembourg Prime Minister Jean-Claude Juncker said there was no optimal rate for the common currency. The pound declined on speculation the central bank will cut growth forecasts tomorrow.
“There was nothing in the G-7 statement to make markets think Japan is about to come under concerted international pressure to do an about-face,” said Daragh Maher, a currency strategist at HSBC Holdings Plc in London. “The yen will weaken a little more.”
Japan’s currency declined 0.2 percent to 126.65 per euro at 7:05 a.m. in New York after climbing as much as 0.7 percent. The yen was little changed at 94.21 per dollar after earlier strengthening to 93.87. The euro rose 0.3 percent to $1.3444.
The yen has tumbled 18 percent in the past three months, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 5.2 percent, while the dollar declined 1.1 percent.
“We reaffirm 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,” G-7 finance ministers and central bank governors said in a statement released in London.
Finance ministers and central bankers from the Group of 20, which includes the G-7 and emerging markets such as Brazil, China and India, are set to meet in Moscow on Feb. 15-16.
“Each nation understands that Japan’s policies to tackle deflation are not aimed at influencing foreign exchange rates,” Aso told reporters in Tokyo. “This was discussed by everyone. We didn’t urge” the G-7 to issue the statement.
The euro rallied for a second day versus the dollar as Juncker said Europe must not be “naive” on currencies. He spoke in Paris after meeting French President Francois Hollande.
“The G-7 statement is being taken as a sign of business as usual,” said Simon Smith, chief economist at FxPro Group Ltd. in London. The euro “was and remains the preferred currency through which to express yen-bearish views.”
The pound dropped to a six-month low versus the dollar amid bets the Bank of England will lower its growth forecasts in its quarterly Inflation Report tomorrow, underlining the case for keeping interest rates at a record low.
The U.K. currency fell 0.3 percent to $1.5612 after declining to $1.5573, matching the low set on Aug. 8.
Switzerland’s franc erased an advance against the euro after the central bank said it will keep applying its ceiling of 1.20 per euro and was ready to take additional measures.
“You could argue the clear foreign-exchange manipulators out there are the Swiss,” Trevor Greetham, director of asset allocation in London at Fidelity Worldwide Investment, which manages $240 billion, wrote in an e-mailed note today. “We are short both the yen and the Swiss, two currencies that pay the lowest interest rates in the world and both with central banks aiming explicitly or implicitly to devalue.” A short position is a bet that an asset will fall.
The franc was little changed at 1.2335 per euro after appreciating as much as 0.4 percent. The currency strengthened 0.3 percent to 91.75 centimes per dollar.