G7 should stabilize currency market: Japan

Agence France-Presse, Tokyo

Japan's Finance Minister Masajuro Shiokawa said Tuesday he would urge Group of Seven (G7) partners to help fend off the impact of last month's terror attacks on currency markets when they meet at the weekend.

"I am planning to propose again that G7 countries should cooperate in stabilizing the U.S. currency and providing ample liquidity to cope with the events after the terrorist attacks," Shiokawa told reporters.

Finance ministers and central bank governors from the world's richest nations will gather in Washington on Saturday for their first meeting since the terrorist strikes on New York and Washington on Sept. 11.

At the news conference, Shiokawa said Tokyo remained cautious about the dollar's movements even after it recently appreciated to above the 120 yen level.

"Even now, we are still alert to the dollar/yen's moves," Shiokawa said.

"I feel the dollar may fall if we stay off our guard, even momentarily," he said.

"If we see signs of a drastic fall in the dollar/yen, we are ready to intervene in the market unilaterally, based on our sole judgment," he added.

Shiokawa said the United States welcomed Japan's intervention in the market over the past two weeks to cap recent yen gains.

Following the attacks, which weakened the dollar against major currencies, Japan's ministry has repeatedly instructed the Bank of Japan to sell yen for dollars.

It has also asked the European Central Bank and US Federal Reserve to sell the Japanese unit on its behalf.

The interventions contributed to a fall in the government's foreign exchange account by nearly US$20 billion in September.

Tokyo fears the strong yen will hurt its key export industries, making Japanese goods more expensive overseas and eroding foreign earnings in yen terms.

The central bank first intervened in the Tokyo market on Sept.17 after the dollar fell to the 116-yen level.

The greenback was quoted at 120.23-25 yen at 12:00 a.m. (0300 GMT or 10.00 a.m Jakarta time), compared with 120.25 yen in New York Monday afternoon. It was up from 119.63-66 yen in Tokyo late Monday.

An original G7 finance ministers' meeting gathering scheduled for the end of last month was postponed after the annual meetings of the International Monetary Fund and World Bank on Sept. 29-30 were canceled in the wake of the terrorism.

Policymakers of the G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- usually meet on the sidelines of those meetings.