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G7 nations seen

showing concern

about strong yen

TOKYO: World financial powers are expected to show their joint concern about the strong yen while Japan will promise its zero interest rate policy at a Group of Seven meeting this weekend, a report said on Sunday.

The G7 nations "are arranging a plan to express concern about a further gain in the yen, which may block Japan's economic recovery, in their joint statement," the Nihon Keizai Shimbun said.

"After watching the yen's move on the foreign exchange market on Monday, the Japanese finance ministry and the Bank of Japan will put the final touches to the wording on the yen's climb," the daily said.

Finance ministers and central bank governors from the seven industrialised countries are to gather in Washington on Saturday on the sidelines of the International Monetary Fund and the World Bank.

"The Japanese finance ministry and Bank of Japan have fears that the yen's rise above the 105 yen level would block the economic recovery," the business daily said.

Tokyo is fretting that the strong yen will throttle emerging hopes for recovery by hurting exporters. A stronger yen makes Japanese exports more expensive overseas and cuts the yen-based value of foreign currency income.

In exchange for its G7 partners' support for the Japanese concern, Tokyo will pledge to maintain its zero interest rate policy in its effort to boost domestic demand-led recovery, the daily said.

Since February last year, the Bank of Japan has been pushing down short-term interest rates close to zero to hold off deflation in Japan's depressed economy.ÑAFP