Oct. 2 (Bloomberg) -- Group of Seven finance officials meet this weekend in Istanbul debating whether to surrender the weapon that helped shape currency markets for three decades.
One week after the G-20 anointed itself the world economy’s main policy forum, G-7 finance ministers and central bankers may break with tradition and choose not to release a statement on the global economy and currencies, said officials who declined to be identified. That would deprive traders of the commentary that policy makers frequently use to influence exchange rates.
The debate over the G-7’s role comes as European Central Bank President Jean-Claude Trichet and Bank of Canada Governor Mark Carney signal concern about the U.S. dollar’s slide over the past seven months and Japan’s new government struggles to find a clear line on the yen. The diversity of the G-20, which includes China and India, means investors may have to deal with conflicting signals as its members seek common ground.
“There may be communication difficulties as policy makers misspeak and inject volatility into markets,” said Stephen Jen, a managing director at BlueGold Capital Management LLP in London. “It will take a few rounds of G-7 and G-20 meetings to form a collective opinion on currencies.”
The euro fell against the dollar yesterday after Trichet said “disorderly movements” in exchange rates have “adverse implicate ons” for economies. The euro fell as much as 0.9 percent to $1.3148. It has gained 16 percent since March.Officials gather tomorrow, one week after President Barack Obama and other G-20 leaders left Pittsburgh pledging to work together to narrow so-called imbalances such as the U.S. trade deficit and China’s current account surplus.