The Japanese currency was in the limelight throughout the week, as speculations ran rampant that the Group of Seven Finance ministers might take a tough stance on the Japanese currency’s weakness at their weekend meeting.

European policy-makers had been calling for the G7 to tackle the yen weakness because it made European exports comparatively more expensive in Japan while Japanese exports became cheaper in Europe. However, both the Canadian Finance Minister Jim Flaherty and the US Treasury Secretary Henry Paulson stated that the yen weakness would not be a topic of discussion as the Japanese currency was only a reflection of economic fundamentals. According to many analysts, current interest rates fundamentals dictated a continuum in the carry trades.

As investors kept on looking for higher yield, they would sell the yen and other low-yield currencies and used the proceeds to buy high-yielding currencies in the popular “carry trade’’. Since the environment for carry trades would continue to boom, market players could expect the yen weakness to continue over the next couple of months. Against the Mauritian rupee, the yen was trading at MUR 28.52 same as a week earlier.

The dollar was subjected to the ebb and flow of wild speculations generated by the meeting of the Group of Seven Finance ministers. As a result, market players were positioning themselves while gathering clues to guess the future path of the US currency.

Many traders were analyzing carefully the aftermath of the G7 meeting, picking out through the remains wondering whether any relevant comments were made on the foreign exchange market.

For the most part of the week, the US currency remained muted as the markets were focusing on the yen. Consequently, US business productivity data for the fourth quarter and the rise in non-farm payroll had little or no impact on the Forex market.

The sterling on a strong note</B>