Group of Seven nations reiterated their commitment on Tuesday to market-determined exchange rates and said fiscal and monetary policies must not be directed at devaluing currencies.

The intervention follows a round of rhetoric about currency wars, prompted largely by Japan's new government pressing for an aggressive expansion of monetary policy, which has seen the yen weaken sharply as a result.

The statement said the G-7 powers — the United States, Britain, France, Germany, Japan, Canada and Italy — had agreed to consult closely on exchange rates which if allowed to move in a disorderly fashion could hurt economic and financial stability.

Forbes Columnist: ‘Who the Hell Cleared This?’

"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," said the statement, released by Britain which chairs the G-8 (G-7 plus Russia) forum this year.

Despite that, there is little suggestion that Tokyo is going to come under serious pressure when G-20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is indulging in similar policies.

Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo's policy steps were not aimed at affecting foreign exchange markets.

"It was meaningful for us as (the G-7) properly recognizes that steps we are taking to beat deflation are not aimed at influencing currency markets," Aso told reporters.

U.S. Treasury official Lael Brainard said on Monday that while competitive devaluations should be avoided, Washington supported Tokyo's efforts to reinvigorate growth and end deflation.

The dollar edged up to 94.21 yen, from around 94.16 yen before the statement was issued.

WORDS NOT ACTION

U.S. and European officials have been concerned about comments from Japanese officials that suggest Tokyo is targeting a specific level for the yen.

Last week, France went as far as calling for a medium-term target to be set for the euro out of concern the exchange rate had become too strong. Berlin rejected that suggestion and said it did not view the currency as being overvalued.

French Finance Minister Pierre Moscovici made little headway at a meeting of euro zone finance ministers on Monday.

Since late last year, the euro has climbed more than 10 cents from below $1.27 before subsiding in recent days after European Central Bank chief Mario Draghi indulged in a bit of gentle verbal intervention, saying he would monitor the impact of a strengthening currency.

The U.S. Federal Reserve and Bank of Japan are expanding their balance sheets rapidly by printing money, while the ECB's balance sheet is tightening, partly due to banks paying back early cheap money the central bank doled out last year.

All else being equal, that could drive the euro yet higher, the last thing a struggling euro zone economy needs.

Any pain will be just as acute in emerging markets.

As newly minted cash pours into developing economies in search of higher yields, either their exchange rates will rise, making exports less competitive, or they will have to cut interest rates and/or intervene to hold down their currencies.

That could fuel credit and asset price booms that sow the seeds of inflation.

Brazilian Finance Minister Guido Mantega told Reuters last week that it could get even worse if Europe joins the fray.

Forbes Columnist: ‘Who the Hell Cleared This?’