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Washington: G-20 Communique

Posted by Joseph Trevisani on Apr 19, 2013 1:24:00 PM


There has been no market reaction to the release of the official communique from the G-20 finance ministers meeting today but then, none had been expected.

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The only item of possible contention, Japan's successful devaluation of the Yen since last summer, had already been obviated when Japanese Finance Minister Taro Aso, attending the meeting in the U.S. capital, was quoted several hours ago saying that Japan's policies on the Yen were unopposed  at the G-20 meeting. The communique said, “Some countries have taken steps to stimulate activity since we last met. In particular, Japan's recent policy actions are intended to stop deflation and support domestic demand."

In the past seven months the Japanese currency has declined 29% against the U.S. Dollar. It has slipped 38% against the euro over the past nine months.

 

G20 Communique Text on FX:

 

"We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments. We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes, and we will resist all forms of protectionism and keep our markets open. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability. Monetary policy should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks."

 

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Charts: Bloomberg

 

Charts: Bloomberg

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