AMID worries of a fresh round of global currency war, the Group of Seven (G7) top industrialized countries asserted that markets will continue to determine exchange rate of currencies. They reaffirmed that their fiscal and monetary policies will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates. Fiscal and monetary policies would “not target exchange rates.

Easy monetary policies of Japan and other nations have sparked fears of a currency war between major economies. There are speculations that policy makers seek to devalue their currencies to make exports more competitive in order to boost growth.The statement said G7 powers the US, the UK, France, Germany, Japan, Canada and Italy had agreed to consult closely on exchange rates which if allowed moving in a disorderly fashion could hurt global economic and financial stability.

The United States has asked the G20 economic powers to avoid competitive currency devaluation that may threaten global economic growth. The Group of 20 finance ministers and central bankers, including India, are scheduled to meet in Moscow at the end of the week where the issue is likely to feature heavily as top most priority.