G7 leaders summit
A sign is pictured during the G7 leaders summit at the Bavarian resort of Schloss Elmau castle, near Garmisch-Partenkirchen, Germany, June 27, 2022. Reuters

Finance leaders of the Group of Seven (G7) advanced economies said on Wednesday they will closely monitor "recent volatility" in markets, and reaffirmed their commitment that excessive exchange-rate moves were undesirable.

"Recognizing that many currencies have moved significantly this year with increased volatility, we reaffirm our exchange rate commitments as elaborated in May 2017," the G7 finance ministers and central bank governors said in a statement released by the U.S. Treasury Department.

Under the commitment agreed on May 2017, the G7 agreed excess volatility and disorderly currency moves have negative impacts on their economies and financial stability.

The G7 finance leaders met on Wednesday on the sidelines of the G20 and International Monetary Fund (IMF) meetings held in Washington this week.

Japan has been pushing hard to include a warning on recent currency moves in the G7 statement, as it struggles to address the yen's slide to 24-year lows against the dollar. Tokyo intervened in the currency market last month to prop up the yen, arguing that recent "rapid, one-sided" moves were speculative.

In the statement, the G7 also said the group's central banks are "strongly committed" to achieving price stability and closely monitoring the impact of price pressures on inflation expectations.

The G7 will "continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to limit the impact on economic activity and cross-country spillovers," it said.

Policymakers gathering from across the world for this week's meetings face the challenge of curbing soaring inflation with interest rate hikes, without triggering a global recession.

The International Monetary Fund on Tuesday cut its global growth forecast for 2023 amid colliding pressures from high energy and food prices and the war in Ukraine, warning that conditions could worsen significantly next year.

The U.S. Federal Reserve's aggressive interest rate hikes have also driven up the dollar against many other currencies, forcing some emerging nations to hike rates despite weak growth to avoid their currencies from falling too much.

In the statement, the G7 finance leaders said they will continue to encourage oil producing countries to increase production to address tight supplies, and engage OPEC+ countries on the issue "despite their recent disappointing decision."

OPEC+, the oil producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) plus allies including Russia, agreed steep oil production cuts earlier this month, curbing supply in an already tight market and drawing harsh criticism from U.S. President Joe Biden.