U.S. and Japan Reaffirm G7 Commitment on FX Policy

The U.S. and Japan renewed their G7 commitments on currency policy, stressing that exchange rates should remain market-driven, according to a joint statement. They warned that “excess volatility and disorderly movements can undermine economic and financial stability,” and pledged to avoid manipulation, limit intervention to disorderly markets, and disclose FX operations monthly. Both sides restated IMF and G7 accords that fiscal and monetary policy should serve domestic goals rather than target currencies, and agreed that macroprudential or capital flow measures should not be used to influence FX markets. They also confirmed that government investment vehicles, such as pension funds, invest abroad for diversification, not currency purposes. Interventions, they said, should be limited to countering disorderly market conditions, while underscoring the importance of transparent and stable exchange-rate practices.