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Group Of Seven Makes Currency Pledge

LONDON (UPI) — The Group of Seven nations, all economic powerhouses, pledged Tuesday to coordinate policies to avoid government interference in currency rates.

A statement posted on the website of the Bank of England said the group “reaffirm[s] that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates.”

Part of the problem in the international community is that domestic policy can affect — inadvertent or intentionally — exchange rates, giving exporters a quick advantage if their currency’s value goes down.

Venezuela recently announced it would devalue its currency 32 percent in an attempt to close a budget deficit. While that makes its exports cheaper to foreign countries, it also makes imports more expensive, which undercuts exports businesses that send goods to Venezuela.

The U.S. Federal Reserve in recent years has initiated several rounds of quantitative easing, meant to stimulate the economy. But the strategy drew quick criticism from other countries, including China and Brazil.

Japan has also been in a spotlight recently, as the yen has lost value sharply since the first of the year, when the new government stepped in which pledges of quantitative easing, a step also called “printing money,” as the process — the government purchasing assets — puts more currency in circulation, which brings down its value.

The New York Times reported Tuesday that Japan, a member of the Group of Seven, was vindicated by the statement.

The group “properly recognizes that the steps we are taking to beat deflation are not aimed at influencing currency markets,” Japanese Finance Minister Taro Aso said.

Besides Japan, the Group of Seven nations includes the United States, Germany, France, Britain, Italy and Canada.

UPI - United Press International, Inc.

Since 1907, United Press International (UPI) has been a leading provider of critical information to media outlets, businesses, governments and researchers worldwide.

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  • http://gillysrooms.blogspot.com Gilly from Australia

    The real problems are explained by a recent article by Morgan Stanley research note titled ‘Investment Lessons from Financial Repression’ which suggests that most western countries are insolvent and that central banks are keeping all our governments alive and operational by printing more money and creating new credit and thus debasing our currencies. ie we are all already broke and the politicians have put us all on a life support system.

    The eventual result will be an avalance of inflation resulting in the massive loss in the real value of pension fund assets which mainly invest in finacial based assets such as Stocks, Bonds & Cash.

    There are not many ways around saving your wealth especially as most people are wasting time by trying to blame the current lot of politicians and the central banks for the sorry mess we are in, because imo if it was not for their actions after the GFC everyone of us, except a few clever people would now be a pauper. The evil we complain about what the feds are doing, should be seen as a godsend to give us all extra time to re-organise our affairs for when things get out of hand and the system collapse completely. Its serious stuff and instead of playing the political blame game and wasting time you should all be taking preventative action.

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