The Group of Seven has signaled it wants Japan to build a consensus before intervening in the foreign-exchange market, according to the nation’s former head of currency policy.

Members have indicated intervention “should be done in agreement with the G-7 as opposed to unilaterally,” Rintaro Tamaki, who was a vice finance minister until July and directed two of Japan’s three rounds of yen sales in the past year, said in an interview in Paris yesterday. He was referring to language in an Aug. 8 statement by the G-7 that said officials will “closely consult” each other on currencies.

Tamaki’s comments indicate Japan may encounter opposition to further yen sales after acting by itself twice in the past 12 months. Canadian Finance Minister Jim Flaherty said he was concerned about actions by Japan and Switzerland to stem gains in their currencies and that the topic will be discussed by G-7 policy makers, who meet today in Marseille, France.

“There is a substantial consensus, at least among G-7 countries, that markets should determine foreign-exchange levels,” said Tamaki, 57, who is now deputy secretary-general of Organization of Economic Cooperation and Development. “It’s been a principle for a long time.”

Scale of Sales

G-7 members jointly sold the yen in March after Japan’s record earthquake. Tamaki also supervised the first solo intervention for Japan in six years last September. His successor, Takehiko Nakao, implemented a third round Aug. 4, his third day in the job. Last month’s tally of 4.51 trillion yen ($58 billion) in yen sales was the biggest since 2004.

Against the dollar, the yen has soared 19 percent in the past two years, reaching a postwar high of 75.95 on Aug. 19. It traded at 77.57 as of 9 a.m. in Tokyo.

The Marseille gathering marks the debut for Japan’s Finance Minister Jun Azumi, who took office earlier this month. Azumi said before departing Tokyo that he would appeal to the group to appreciate his concern about excessive yen gains.

“I want to tell them that we are going to take bold action if there are excessive moves,” Azumi told reporters today in Marseille. Japan is “closely monitoring speculative trading” and a strong yen “threatens to throw water on the economic recovery,” he said.

Shrinking Economy

A government report today showed that Japan’s gross domestic product contracted at an annual 2.1 percent pace in the second quarter, the third straight period of decline.

Investors have flocked to currencies including the yen and Swiss franc as perceived havens from the euro-region’s debt crisis and a U.S. economic recovery that’s been too weak to pull unemployment under 9 percent. Europe’s sovereign-debt woes will probably be the main topic at the G-7 meeting rather than currencies, Tamaki said.

The Swiss National Bank said this week it will attempt to prevent the franc from rising with the “utmost determination,” setting a ceiling of 1.20 francs to the euro.

“We were concerned when Japan acted unilaterally with respect to their currency,” Flaherty told reporters in Ottawa. “We’re also concerned about Switzerland acting unilaterally. That’s a discussion I’m sure we’ll get into this weekend.”

Bloomberg