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Japan to keep seeking

G7 forex cooperation

TOKYO: Japan will continue to seek close cooperation on currencies among monetary authorities of the Group of Seven (G7) industrial nations, although the foreign exchange market has been stabilising, an international monetary source told reporters on Wednesday.

Finance ministers and central bankers from the G7 nations will discuss the need to cooperate closely to ensure stability in currency markets when they meet on Sunday in Washington, the source said. The meeting is on the sidelines of a semiannual session of the International Monetary Fund and World Bank.

"Although the currency market has been stabilising, (Japan) will continue to seek close cooperation between monetary authorities," the official said.

He added that it was unclear whether the G7 would refer to an orderly reversal of the dollar's weakness, which it agreed to seek in April last year.

Asked about expectations that currencies might not be a dominant factor at Sunday's G7 meeting in view of the dollar's recovery from the record low of 79.75 yen hit in April last year, the source said: "Currencies are one important factor in the macroeconomic perspective, but when we compare the currency situation from a year ago, there are considerable changes from what we saw in April last year."

In early evening on Wednesday in Tokyo the dollar was trading at around 108.32 yen.

He said the G7 would discuss whether there was any need for it to send any signal to the currency markets.

Japan would explain to its G7 partners that it was making utmost efforts to ensure economic recovery despite its severe budgetary situation and that recent economic indicators showed signs of recovery, the source said.

It would also explain that its current account surplus had been declining significantly and its policies to tackle bad loan problems in the financial sector, including those held by mortgage firms.

Asked about the possibility of Japan facing any demand from the G7 for it to take additional stimulative measures, the source said an economic stimulus package unveiled last September would continue to lend support to the economy in the new fiscal year that started on April 1, and more fiscal support would be given once parliament had enacted the state budget for 1996/97.

He said the G7 may discuss how each nation should manage monetary policy, but added that he did not know whether Japan would be asked by other nations at Sunday's meeting to maintain its current soft monetary stance.-Reuter