The world's major industrial nations sought to soothe mountingfears of a currency war with a pledge to avoid devaluing theirexchange rates in the pursuit of stronger economic growth.

“We reaffirm that our fiscal and monetary policies have been andwill remain oriented towards meeting our respective domesticobjectives using domestic instruments, and that we will not targetexchange rates,” the Group of Seven's finance ministers and centralbank governors said in a statement released today in London.

The stance is tougher than the G-7's last joint comment onexchange rates in 2011 and marks an effort to avoid a 1930s-stylespiral of retaliatory devaluations in which weak economies try toboost exports by driving currencies down. It follows an outbreak ofconcern that Japan's new campaign to beat deflation is an outrightattempt to weaken the yen, an allegation its government againdenied today.