Article: Japan ensures G20 pledge vs ‘disorderly’ moves as FX language tweaked, sources say

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Japan ensures G20 pledge vs ‘disorderly’ moves as FX language tweaked, sources say

Tetsushi Kajimoto, 09 April 2021

TOKYO (Reuters) – Japan made sure that language warning against excess currency market volatility remained in place when G20 finance leaders made a rare tweak to their message on exchange-rate moves, said officials with knowledge of the deliberations.

In the first communique compiled since U.S. President Joe Biden took office, finance leaders of the Group of 20 major economies called for the need for currency moves to reflect “underlying” economic fundamentals.

It also noted that flexible currency moves can “facilitate the adjustment” of economies. Removed was a line stressing the need for “stable” exchange rates, which was inserted under the former administration of Donald Trump, who repeatedly sought to talk down the dollar to give U.S. exports a trade advantage.

Some market players saw the change as reflecting new U.S. Treasury Secretary Janet Yellen’s belief that markets should determine currency moves.

“It was reflection of Yellen’s belief in market-oriented exchange rates,” said Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities. “Japan and other countries made no objection as it was not meant to change the G20 stance on currencies.”

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