FXstreet.com (Barcelona) - The G-20 communiqué provied little
fresh headlines to market participants, with the main take away on
FX-relate news being the permissive stance towards Japan's monetary
policies to beat deflation. The G20 communiqué is basically echoing
the same position by the G7 back in February.
As noted by Eamonn Sheridan of Forexlive: "Leading into the G20
meeting market concern was that Japan would come under fire for its
deflation-fighting policies (which have, as a side-effect, a weaker
yen or are have as a central component the aim of a weaker yen,
depending on your point of view). It became clear on Friday that
Japan had escaped censure from the G20 over its policies, a
position made officially clear at the conclusion of the meetings."
The section in the G20 communique that makes references to
currencies, stated: "We reiterate our commitments to move more
rapidly toward more market-determined exchange rate systems and
exchange rate flexibility to reflect underlying fundamentals, and
avoid persistent exchange rate misalignments. We will refrain from
competitive devaluation and will not target our exchange rates for
competitive purposes, and we will resist all forms of protectionism
and keep our markets open."
It added: "We reiterate that excess volatility of financial flows
and disorderly movements in exchange rates have adverse
implications for economic and financial stability. Monetary policy
should be directed toward domestic price stability and continuing
to support economic recovery according to the respective mandates
of central banks. We will be mindful of unintended negative side
effects stemming from extended periods of monetary easing."
As the TDS team reports: "There was no direct reference to the JPY
or BoJ policy in the statement. Japan Fin Min Aso indicated that
that Japan had succeeded in persuading its partners that monetary
easing was not aimed at FX manipulation and the broader undertone
of the post-meeting comments tends to suggest that the JPY was not
an especially high-priority issue."