7 February 2007, 16:58  Yen resumes slide

The yen retreated versus the euro and the dollar on Wednesday as investors grew more confident that this weekend's Group of Seven meeting would not yield a joint statement on the Japanese currency's weakness. The yen's slide of some 16 percent in the past three years to successive record lows against the euro has captured market attention, with European officials determined to take the issue up at the G7 meeting in Essen, Germany, on Feb. 9-10. But U.S. and Japanese officials have continued to play down the issue, leading many analysts to conclude that the yen will not be singled out for attention in the post-meeting statement. A senior official at Japan's Finance Ministry said on Wednesday that the yen could be discussed at the G7 but that it was unlikely to be the main subject of the talks. That followed U.S. Treasury Secretary Henry Paulson saying on Tuesday that the yen's value was set by market fundamentals, suggesting Washington does not have a problem with a weak yen. In contrast, German Deputy Finance Minister Thomas Mirrow said on Wednesday that discussion of FX rates will play a key role at the G7 and that the yen is "an important currency". "The reason the yen is weakening is because the broader consensus now after Paulson overnight is that the Japanese are not going to say anything," said Adam Myers, currency strategist at UBS. "The most likely scenario is definitely no change in the statement. But we won't see any specific comments from the Japanese, only from the Europeans," he added

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