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.