"The G-7 doesn't put any additional pressure on Japan so the downward trend in the yen will reassert itself," Adam Cole, head of global foreign-exchange strategy at Royal Bank of Canada in London, said in a telephone interview. "There is nothing here really to stop the yen falling."

The G-7 also reiterated its traditional stance that members are committed to "market-determined" exchange rates and that "excessive volatility and disorderly movements" can hurt "economic and financial stability."

The statement was released three days before finance chiefs from the Group of 20 hold talks in Moscow, and with the yen having fallen about 14 percent against the dollar since mid- November to its lowest since 2010. The G-7 may have acted today to smooth the G-20 talks where the yen's decline could have drawn complaints from China which is often attacked for massaging the yuan's value.

"They may be trying to dictate the discussion on foreign exchange and reduce the likelihood that Japan's current tactics become a divisive point when crafting the G-20 communique," said Daragh Maher, a strategist in London at HSBC Holdings Plc.

David Fuller's view I view this as a tactical move by G-7 countries, three days before the G-20 meeting in Moscow. They would presumably like to prevent the yen's recent weakness from becoming a major discussion point.

Japan's trade rivals will inevitably have some reservations about the yen's slide, which is a key economic policy of new Prime Minister Shinzo Abe. However, any criticism would be disingenuous since Japan has endured an overvalued currency for decades, while most other countries have actively lowered the value of their currencies.

Currently, the yen's daily directional moves (shown inversely against the USD) are the key influence on Japan's stock market (weekly & daily). The G-7 announcement and the imminent G-20 meeting are causing some investors to reduce their short yen exposure in European and USA trading hours today, and this will most likely cause Japanese equities to give up some of their most recent gains on Wednesday. Nevertheless, a break in the progression of higher reaction lows will be required to check the Nikkei's upward momentum beyond a brief pause.

I think Japan will continue to devalue the yen, albeit at a somewhat slower, ranging pace to avoid destabilisation and more outspoken criticism. I regard Japan's current policies as essential, in order to break the disinflationary / deflationary trend, reviving the economy in the process.

Assuming that Shinzo Abe and his colleagues maintain these policies for at least the medium term, Japan should remain one of the best performing stock markets. The USA and its allies will quietly favour a stronger Japanese economy, in the interests of global GDP growth and as a counterweight to China's growing influence.