Finance leaders of the Group of Seven richest economies have cautioned that volatility in foreign exchange markets could hurt the global economy and financial system.

The G7 said, “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”

The G7 leaders said in their meeting Saturday in Istanbul that efforts made by governments had improved conditions for the world economy but they cautioned that recovery would remain fragile.

At present, rate of unemployment is at 9.8 per cent, the highest in the last 26 years. 

Leaders of the G7 countries are concerned that an undervalued Yuan is contributing to an uneven global economy. On the one hand China runs huge surpluses and on the other, the US large deficits.

However, the G7 welcomed China’s pledge to make efforts towards greater currency flexibility.

In addition, the G7 reaffirmed to keep in place their support measures until recovery is assured. 

A weaker dollar against major currencies put economies outside the US at risk by making the exports of companies more costly. 

The dollar has plummeted around 10 per cent against the Euro and Yen in the last two quarters.