“You could argue the clear foreign-exchange manipulators out there are the Swiss,” Trevor Greetham, director of asset allocation in London at Fidelity Worldwide Investment, which manages $240 billion, wrote in an e-mailed note today. “We are short both the yen and the Swiss, two currencies that pay the lowest interest rates in the world and both with central banks aiming explicitly or implicitly to devalue.”
The G-7 clarification spurred gains in the yen and came just hours after the world’s major industrial economies appeared to signal acceptance for a weaker Japanese currency so long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.
G-7 finance ministers and central bank governors said in the earlier statement released in London, “we reaffirm 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.”
Finance ministers and central bankers from the G-20, which includes the G-7 and emerging markets such as Brazil, China and India, are set to meet in Moscow on Feb. 15-16.
“It is hard to see how the market can be accused of mis-interpreting a communique, which was essentially a re-run of one delivered in 2011,” said Daragh Maher, a currency strategist at HSBC Holdings Plc in London. “The problem for the foreign- exchange market is that we now trading rhetoric rather than data, which means we are at the behest of whichever comment is the latest to hit the screens.”