Nakagawa Says G-7 Statement on Yen Was `Effective'

By Keiko Ujikane

Oct. 28 (Bloomberg) -- Japanese Finance Minister Shoichi Nakagawa said yesterday's statement on the yen by the Group of Seven nations was ``effective'' because it helped to cool currency volatility.

``We released the G-7 statement based on the view that abrupt moves in currencies are negative for any nation,'' Nakagawa told reporters in Tokyo today. Currencies didn't move much since the statement, so ``in that sense, it was effective,'' he said.

Nakagawa declined to comment on whether the government is considering intervening in the foreign-exchange market to stem gains in the yen, which is trading close to a 13-year high against the dollar. The G-7 statement expressed concern about the yen's ``excessive volatility,'' sparking speculation monetary authorities may sell the currency.

French Finance Minister Christine Lagarde said after the statement that any intervention would be ``purely Japanese'' and the G-7 had no plans to help. The G-7 consists of the U.S., Japan, Germany, U.K., France, Italy and Canada.

The yen traded at 93.13 per dollar as of 10:33 a.m. in Tokyo from 92.78 late yesterday in New York. It gained 14 percent against the dollar this month and 28 percent versus the euro as a global stock-market rout prompted investors to repay loans made in Japan, which has the lowest interest rates in the industrial world.

Japan hasn't stepped into the foreign-exchange market since it sold 14.8 trillion yen ($160 billion) in the first three months of 2004, when the currency traded around 103 per dollar. The G-7 hasn't bought or sold currencies since September 2000 when it intervened to buoy the euro.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net