Confusion as G7 steps in over currency wars

Attempts by the world's seven major economies to calm the growing tensions over exchange rates triggered by the weakening yen have failed, as currency markets suffered a second day of volatility.

The G7 said on Tuesday that fiscal and monetary policies will not be directed at devaluing currencies, hoping to soothe worries Tokyo will initiate aggressive monetary policy expansion to allow the yen to weaken. But instead of calming the market, the statement sparked confusion and significantly raised volatility that has been evident since the start of the week, Reuters reports. The yen initially weakened on the news, as Japan's finance minister Taro Aso thought the statement gave the country a green light to continue reflating its economy. However, the currency reversed directio...