Group of Seven agrees to avoid excessive Asian currency drops

Group of Seven agrees to avoid excessive Asian currency drops

WASHINGTON (Reuters): Financial leaders of the Group of Seven
industrial countries agreed on Wednesday to avoid excessive
currency falls and said they would continue to cooperate in
foreign exchange markets when needed.

In a communique issued after their meeting, the G-7 members
welcomed steps taken by Japan to stimulate its economy, which
would help to correct the excessive weakness of the yen. They
urged Japan to implement quickly a strong program of fiscal
measures and structural reforms.

"We emphasized that it is important to avoid excessive
depreciation where this could exacerbate large external
imbalances. In light of this, we support appropriate steps by
Japan aimed at stimulating domestic demand-led growth and
reducing external imbalances, thus also correcting the excessive
depreciation of the yen," they said.

The G-7 comprises the United States, Britain, Canada, France,
Germany, Italy and Japan. Japan was the focus of this meeting, as
the world's number two economy, and the communique noted that
challenges facing it "are serious and have intensified in recent
months."

In contrast, it said strong expansion continued in North
America and in Britain. The communique said growth in Germany,
France and Italy "gained momentum in 1997 and is expected to
strengthen further this year."

The G-7 members said they welcomed progress toward restoring
financial stability in crisis-wracked Asia and were encouraged by
signs capital markets were being restored in some countries. The
communique urged Indonesia, now receiving a huge international
bail-out, to move "fully and vigorously" to implement reforms.