G7 Finance Ministers Express Concerns of Foreign Exchange Volatility

Finance ministers from Japan and other Euro Zone countries are gathering for the upcoming G7 meeting schedule for next week.  The finance ministers seek to put a halt to excessive foreign exchange movements, resulted from growing concerns over the U.S. economy and the ever weakening U.S. Dollar, in the wake of the sub-prime crisis.  Last month, the U.S. dollar fell to its lowest level in 13 years against the Yen, and at one point, closed at a historical low of $1.5906 versus the Euro.

Several European Finance Ministers have been vocalizing their concerns over the steep gains the Euros has recently had against the U.S. Dollar, which disadvantaged the region’s exports.  Fukushiro Nukaga, the Japanese Finance Minister, yesterday told reporters that he felt it was necessary that G7 members acknowledge and understand that, “excessive foreign exchange rates move are undesirable for economic growth.” Economic growth in Japan depends heavily on exporters.  According to SonyCorp, the company loses $59 million for each one yen increase against the U.S. Dollar.

Jean-Claude Juncker, Finance Minister of Luxemburg and the EuroGroup Chief, echoed Nukaga’s sentiment when he stated that it was his opinion that, “excessive volatility and disorderly rate moves are harming worldwide economic growth.”

The wording on all communiqués released by Finance Ministers of the G7 are intentionally similarly phrased, providing the first indication of an agreement among them to make a concerted effort to stem the volatility of the foreign exchange markets.