September 17, 2006	Sunday	Sha'aban 23, 1427

SINGAPORE, Sept 16: The Group of Seven rich nations urged China on Saturday to let its currency rise faster to help ease perilous imbalances in trade and backed a rise in the yen to reflect Japan's strengthening economic recovery.

In a statement issued after talks, G7 finance ministers and central bank chiefs complained that large emerging economies were not pulling their weight in the collective management of the global economy.

But Beijing, blamed by critics for holding the yuan down to boost its exports, was the only country singled out by name.

“Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur,” the G7 said.

The communiqué did not mention the yen. But, in apparently coordinated comments after the meeting, G7 officials opened the door for a rise in the currency, which has fallen to a 21-year low when adjusted for inflation.

The yen is languishing even though the Bank of Japan, on July 14, showed confidence in the economy by raising interest rates from zero for the first time since 2001.

“We noted that the exit from the zero interest rate policy and that its recovery is now broadly based -- we agree that the yen will reflect these developments,” Jean-Claude Trichet, president of the European Central Bank told reporters.

German Finance Minister Peer Steinbrueck used similar language, suggesting a coordinated message: “The (Japanese) exchange rate should reflect these two developments.”

Europe is wary of the yen's softness for fear the euro will have to bear more of the burden of global currency adjustment.

But Japanese Finance Minister Sadakazu Tanigaki, too, chimed in by saying that the yen's recent drop to record lows against the euro had been a bit “wild”.—Reuters