GYEONGJU, South Korea (MNI) – The Group of Seven finance ministers
and central bank governors will have a “free” discussion on Friday ahead
the G20 meeting here, checking the pulse of the global economy in
general but also covering foreign exchange rates, Japanese Finance
Minister Yoshihiko Noda said.

Asked about the G20 meeting that brings together both
industrialized and emerging economies, Noda told reporters, “We must
share the view that competitive moves to devaluate currency rates, as
history shows, would be negative for the world economy.”

He also said the G7 has confirmed that the strong and stable world
financial system is “our common interest,” it is important to reflect
economic fundamentals in forex markets, and excessive or disorderly
moves in foreign exchange rates will have a negative impact on economic
and financial stability.

The group has also agreed to watch markets closely and conduct
appropriate coordination, he added.

“We will reconfirm these at the G20 meeting,” said Noda.

“The G7 hold informal meetings sometimes. The G7 nations meet
whenever we can meet,” he said, adding that today’s meeting was set at
the last minute.

“There is no particular agenda for the meeting today. Our aim is to
freely compare notes,” he said. “We will discuss the world economy in
general but currency issues will also come up (at the G7 meeting).”

Asked about the U.S. call for guiding economies’ current account
imbalances to certain ratios of their GDP, Noda replied, “I’m not sure
what the U.S. wants to do until we listen to them, but I think setting a
numerical target would not be realistic.”

Later Bank of Japan Governor Masaaki Shirakawa told reporters that
the best part of holding frequent G7 meetings is to “have free
discussion without setting any agenda in advance.”

“At this G20 meeting, we will discuss global economic and financial
conditions including foreign exchange markets. We will also have
constructive debate on financial regulation and other issues,” Shirakawa
said, adding that similar discussion will be held at the G7 meeting
today.

He declined comment on whether it is appropriate for some emerging
countries to restrict large capital inflows that they blame for
extremely easy monetary policy among advanced economies.

“It is an important approach by both developed and emerging
countries to work toward development of the world economy,” he said.

Asked what benefits China’s rate hike this week will have on its
and global economies, Shirakawa replied, “I understand that it is a
measure taken by the Chinese authorities for sustained economic growth
in China. I fully understand such attitude.”

msato@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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