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These are stories Report on Business is following Tuesday, Feb. 12, 2013.

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G7 currency pledge goes awry
The G7 countries seemingly moved today to calm concerns over a currency war and ease volatility in foreign exchange markets, but managed somehow to screw up the message.

Here's how it played out:

Last night, the yen weakened after a U.S. Treasury official said his country supported Japan's efforts to bolster its economy, moves that have picked up since the election of a new government.

Then this morning, G7 finance ministers and central bankers released a joint statement that suggested those countries would not engage in a currency war, that their actions on the monetary and fiscal policy fronts will be aimed at juicing their economies, not driving down the value of their money. That did not move markets.

As The Globe and Mail's Kevin Carmichael reports, pressure has been growing on policy makers in advance of a meeting of G20 finance officials later this week in Moscow, so, in that sense, the G7 move was not surprising.

But after the G7 statement, an unnamed official of the G7 told reporters in the United States that markets had misinterpreted the statement and that it was in fact aimed at Japan, that it's okay for Tokyo if a weaker yen is the result of policies aimed at driving the economy, but it's not kosher if policies are aimed specifically at devaluing the currency.

"The G7 statement signalled concern about excess moves in the yen," the official is reported to have said in comments that drove the yen higher. "The G7 is concerned about unilateral guidance on the yen. Japan will be in the spotlight at the G20 in Moscow this weekend."

Well, they should have said that in the first place.

What the G7 appeared to be saying - before the unnamed official signalled it was a warning to Tokyo - is that currency devaluation can be a byproduct, rather than a goal, on the long, hard road back to a sustained recovery.

The Federal Reserve's quantitative easing, for example, an asset-buying program, is negative for the U.S. dollar, but is aimed at juicing the economy, not driving down the greenback.

"We, the G7 ministers and governors, reaffirm our longstanding commitment to market determined exchange rates and to consult close in regard to actions in foreign exchange markets," the group said in statements posted on individual central bank websites.

"We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates," they said in the statement.

"We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability."

Talk of a currency war has mounted after Japan's efforts and comments by France's François Hollande on the strength of the euro amid the region's recession.

"They're pledging that their monetary policies are aimed at economic growth, and are not aimed at currencies," chief currency strategist Camilla Sutton of Bank of Nova Scotia said in an interview, noting the "fine line" between countries engaging in a currency war and the fallout on currencies from other actions.

"This distinction is important as, if monetary policy's intended outcome is to weaken the currency for economic gain it would be considered part of a currency war; however if monetary policy's goal is to improve the domestic economic environment and the byproduct is a weaker currency, then it is far more globally acceptable," she added later in a report.

She added, however, that some advanced countries, notably Switzerland, have in fact targeted their currencies. Japan has suggested it's moving toward such action, but hasn't done it, she added, while Mr. Hollande has less control of a currency shared by 17 countries.

"The statement suggests that asset purchase programs should use only domestic instruments," Ms. Sutton said.

"Accordingly, if Japan is to adhere to the statement they would not be able to enlarge their asset-purchase program to include the buying of foreign bonds (a strategy of some of the BoJ governor candidates); a policy that would be weaken [the yen] further."

Ms. Sutton's colleagues at Scotiabank, Derek Holt and Dov Zigler, described the G7 statement as "toothless," though they don't believe a currency war is afoot.

"If they are so inclined to target exchange rates through whatever means they will do so and simply couch it in the context of pursuing other goals like stimulating their financial systems or addressing bond market stresses," they said in a separate research note.

"Pious statements of intent serve limited purpose. Further, statements like these are always toothless tigers in that the scope for punishing each other in the event that it can be proven that a country is attempting to manipulate its currency is rather limited in practice."

Telus is grilled
One of Canada's largest wireless carriers faced a grilling from the federal telecommunications regulator today on the thorny issue of pricing, The Globe and Mail's Rita Trichur reports.

During the second day of public hearings on the creation of a code of conduct for the $19-billion wireless industry, Telus Corp. was asked to explain why it fails to automatically lower monthly fees for customers who remain with the carrier after the expiration of a three-year contract but continue to use the same cellphone.

Dave Fuller, Telus's chief marketing officer, confirmed that monthly rates do not automatically fall upon the expiration of a three-year contract, but he noted that consumers have the option of moving to a new rate plan at a 10 per cent discount if they want to use the same device. Those customers, though, have to take the initiative to indicate that preference to the company

Barclays in overhaul
The new CEO of Barclays Bank PLC CEO summed it all up in three words today: "We get it."

Unfortunately for thousands of Barclays employees, getting it also means getting the axe.

As The Globe and Mail's Paul Waldie reports from London, Antony Jenkins said the world of banking has "changed fundamentally," and banks must do well financially but also behave.

Banks that don't change will be left behind, and those who believe they can wait out the current issues are wrong, he said in a speech.

Barclays, of course, was the first bank to settle in the global Libor probe.

Mr. Jenkins also unveiled 3,700 job cuts, the shutdown of the Barclays tax-planning business and lower pay for bankers.

Nexen deal gets go-ahead
U.S. regulators have approved the takeover of Canada's Nexen Inc. by China's CNOOC Ltd., meaning the $15.1-billion (U.S.) deal now has the final go-ahead.

The deadline to close the deal had been extended as the Canadian energy giant awaited the U.S. decision.

The Committee on Foreign Investment in the United States has now given the green light, Nexen said today, and the deal will close in the week of Feb. 25.

The U.S. Gulf Coast accounts for some 12 per cent of Nexen production, which meant U.S. approval was required.

If you want a real raise ...
Salaried employees in resource-rich Alberta and Saskatchewan will have more to show for their toils this year than their counterparts in the rest of the country, the Conference Board of Canada predicts.

The group projects pay hikes of about 4 per cent in the two provinces, eclipsing the forecast national average of 3 per cent.

"While employers are feeling the pinch in Ontario and other parts of eastern Canada, the oil and gas sector is pushing up wages in Alberta and Saskatchewan," Conference Board vice-president Ian Cullwick said in a statement accompanying the group's report today.

"Salaries in oil and gas this year are rising slightly faster than we projected, and labour markets in western Canada are tightening," he said.

"We have heard from natural resources firms that virtually all of them are having trouble finding the skilled workers they need."

Ontario, Quebec and British Columbia will all lag the national average, at 2.5 per cent, 2.7 per cent and 2.5 per cent, respectively.

(For a map outlining projections for pay hikes, see the accompanying infographic or click here.)

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