TOKYO, Feb 3 - Japan said on Tuesday that this week's Group of Seven meeting would focus on broader economic issues but sought to avoid giving the impression that the world's top economies had given up on the dollar's precipitous fall. Although financial markets have been fixated about whether the G7 finance ministers and central bankers would try to halt the dollar's decline, Finance Minister Sadakazu Tanigaki said the talks would centre on how to achieve healthy global growth. "Macroeconomy, structural issues -- these will have the most weight in the discussions," Tanigaki told a news conference. The remark echoed those from U.S. Treasury Undersecretary John Taylor, who said on Monday that measures to speed up global growth would be the focus at the meeting in Boca Raton, Florida. Still, with the dollar sinking to its lowest level against the yen in nearly 3-Ѕ years only a day earlier, threatening to dampen Japan's export-driven economic recovery, Tanigaki sought to avoid being interpreted in the hard-nosed market as softening his stance against a higher yen.
"The issue of foreign exchange will not be neglected by the G7," he said. Complaints from European officials worried about the euro's rise to record highs against the dollar, which at least on the surface were similar to Japan's stance, fuelled speculation that the G7 would amend its statement to express concern about the dollar. But more recently, the dollar has come under renewed pressure as signs that Europe was also unhappy about Japan's intervention led to growing anticipation that any change to the G7 statement, which in September called for greater exchange rate flexibility, would be limited.
RECORD INTERVENTION
Asked if he expected his G7 counterparts to be approving of Japan's record-shattering intervention over the past year, Tanigaki said he would not know until they talked about it. However, his counterparts shared the view that exchange rates should reflect economic fundamentals and move in a stable manner, he said. On Friday, the Ministry of Finance said it had conducted a monthly record of 7.15 trillion yen ($67.75 billion) of intervention in January, on top of an annual record of 20 trillion yen in 2003. Despite such huge intervention, the dollar was hovering just above 105.50 yen in early trading on Tuesday, barely making any headway after falling to around 105.40 yen on Monday, its lowest against the yen in nearly 3 Ѕ years. Japan has been concerned that a higher yen will suffocate its exporting industries and exacerbate the price deflation that has undermined the economy for years. Vice Finance Minister for International Affairs Zembei Mizoguchi, who met with his counterpart sherpas from the G7 countries in Brussels last week to set the agenda for the Florida meeting, said currencies would be part of the economic talks. "Everyone is looking towards expanding their economies, and so it is important that G7 countries run their economies in an appropriate way," he said when asked how Japan would explain its forex position at the forthcoming G7 meeting. "Japan is proceeding with structural reform, and monetary policy is very loose. The U.S. is working to lower its deficits. Europe is pushing structural reform and has said currency stability is very important. In general, there is no difference in views here." ($1=105.53 yen)//