* Bank of England's King: Take G7 statement at face value
* Chides "so-called officials" for off-record briefing
* G20 chair Russia says important Japan hasn't intervened in
By Clare Hutchison and Lidia Kelly
LONDON/MOSCOW, Feb 13 A Group of Seven statement
designed to cool international currency tensions should be taken
at face value and anonymous officials should not try to
reinterpret it, the Bank of England's chief said on Wednesday.
Currency markets were thrown in to turmoil on Tuesday after
a day of mixed messages about exchange rates, prompted by
Japan's new government pressing for an aggressive expansion of
monetary policy, which has seen the yen weaken sharply.
G7 nations - Britain, the United States, Japan, Germany,
France, Italy and Canada - said fiscal and monetary policies
must be directed at domestic economies and not at targeting
Japan quickly said the statement - released by Britain which
chairs the G8 grouping (G7 plus Russia) this year - gave it a
green light to continue efforts to reflate its economy.
But a G7 official responded by saying it was aimed squarely
at Tokyo, a comment that prompt the yen to surge on a volatile
foreign exchange market.
Bank of England Governor Mervyn King said the statement
should be taken at face value.
"When countries take measures to use monetary stimulus to
support growth in their economies, then there will be exchange
rate consequences and they should be allowed to flow through,"
King told a news conference.
"In the short run if you want to allow countries to
stimulate growth, you have to allow them to take the measures of
a monetary or other kind which will have consequences on the
exchange rate, and we should let floating exchange rates take
them where they will.
"When I put my name to that statement yesterday, I didn't
expect that other so-called officials will be out there giving
unattributable briefings ... trying to claim that the statement
said what it didn't say."
Russia, chair of the Group of 20 nations, said it was
important that Japan had not intervened on currency markets to
weaken the yen.
"The Japanese yen was definitely overvalued," Deputy Finance
Minister Sergei Storchak told reporters, ahead of the G20
meeting in Moscow on Friday and Saturday.
Germany said the statement should draw a line under debate
"I'm very glad that we have hopefully concluded the question
of exchange rates for now ... which all G7 members accepted and
I hope the G20 will also accept," a German government official
A source familiar with the discussions that led to the
release of the G7's first statement on exchange rates since 2011
said the off-record intervention may have been prompted by
irritation that Japan had responded so quickly to say it had
been given a clean bill of health.
ALL EYES ON G20
As a result, discussion at a G20 meeting of finance
ministers and central bankers in Moscow at the end of the week
may be more heated than previously expected with some concern
about the pace at which the yen has fallen.
But officials said it was unlikely that Tokyo would face any
"To me the statement says - as long as price action is
smooth (G7 officials) are not going to do anything. So I stand
by my point that we are going to have more yen weakness in the
medium-term," said Vasileios Gkionakis, head of global FX
strategy at UniCredit in London.
Japan's top financial diplomat said his government will tell
the G20 that its push to revive the economy with aggressive
monetary expansion will benefit other nations and outweigh any
possible negative effects.
"We share the view that each country should put their house
in order by pursuing appropriate monetary, fiscal and structural
policies and that would be the best contribution to the global
economy," Takehiko Nakao, vice finance minister for
international affairs, told Reuters in an interview.
U.S. and European officials have been concerned about
comments from some Japanese officials that suggested Tokyo was
targeting a specific level for the yen.
"You don't depreciate your way to growth whatever country
you are," British Prime Minister David Cameron told parliament.
But 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
The U.S. Federal Reserve, like the Bank of Japan, has
created vast amounts of new money to bolster its economy.