Eurozone debt crisis to dominate G-7, Japan to raise yen concern

MARSEILLE, France, Sept. 9 Kyodo - The Group of Seven financial chiefs met Friday in the French port city of Marseille, with the agenda likely to be focused on how to address the sovereign debt crisis in Europe and stabilize financial markets.
During the half-day meeting, Japanese Finance Minister Jun Azumi is expected to raise concerns about the yen's recent appreciation and argue that a failure to stem the current trend of a strong yen could derail the Japanese economic recovery and hurt the world economy as well.
After arriving in Marseille late Thursday, Azumi told reporters, ''The yen's excessive appreciation could dampen Japan's economic recovery from the March disaster.''
''The negative impact of the yen's appreciation on the Japanese economy is not good for the global economy as well,'' he said, adding Tokyo will take necessary steps to arrest excessive movements in a firm manner.
Ahead of the G-7 talks, Bank of Japan Governor Masaaki Shirakawa also told reporters Friday morning, ''The European financial crisis is a major factor behind the growing uncertainties about the world economy and the yen is gaining strength as a relative safe currency.''
Shirakawa said he plans to argue during the meeting that addressing European financial problems is necessary for countries in the region but will also indirectly have a positive impact on the Japanese economy.
The G-7 gathering, involving Britain, Canada, France, Germany, Italy, Japan and the United States, comes about a month after Tokyo conducted its largest-ever single-day currency intervention on Aug. 4 to stem the sharp rise of the yen against the U.S. dollar.
The yen remains strong, however, and the dollar hit a fresh postwar low of 75.95 yen in New York on Aug. 19.
However, the G-7 participants are unlikely to spend much time discussing the currency issue as most members are more concerned about the European financial problems, particularly the Greek debt issue.
The recent decision by the Swiss National Bank to set a minimum exchange rate target to curb the Swiss franc's surge against major currencies apparently has not prompted the G-7 nations to support further currency market interventions by Tokyo to weaken the yen.
''Switzerland has a unique situation,'' a senior U.S. official said Wednesday, indicating tepid support from Washington for Japan's currency intervention, given the boost to U.S. exports from a weak dollar.
During the Marseille meeting, the G-7 finance ministers and central bank governors are expected to reaffirm the need to restore fiscal health, while pledging to take necessary measures to jump-start the global economy.
The discussions will also likely cover reform of the financial sector.
The G-7 talks will be the first major international conference since Japan's new prime minister Yoshihiko Noda took office last week, and will mark the diplomatic debut of Azumi.
Azumi also said he will brief other G-7 members about Japan's plan to promote fiscal consolidation under the Noda Cabinet.