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LONDON, Feb 12 AFP

February 12 2013, 10:08PM

The Group of Seven top industrialised nations said that "excessive volatility" in exchange markets undermines stability, in a statement by current G7 president Britain.

But Tuesday's statement stood by foreign exchange rates set by the market, despite objections from France last week to market-driven currency values, against a background of concern about competitive devaluations.

"We, the G7 ministers and governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets," they said in a brief collective statement.

"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.

"We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and co-operate as appropriate."

Japan's recent monetary easing has stoked fears, especially in Europe, of a so-called "currency war" between the major economies as policymakers seek to devalue their currencies to make exports more competitive.

Overnight, Washington had urged the Group of 20 economic powers, which holds a meeting later this week, to avoid competitive currency devaluation -- or so-called "currency war" -- that would threaten global economic growth.

"To ensure growth strategies in the world's largest economies are mutually compatible and promote global growth, the G20 needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation," said Lael Brainard, the Treasury official who will lead the US delegation to the meeting.

Brainard, the Treasury under secretary for international affairs, notably called on China to do more to let the yuan float more freely in the market.

He was speaking at a news conference focused on the G20 finance meeting that opens on Friday in Moscow.