* Japan PM Abe says ready to act if necessary
* Merkel says stable currencies are of great value
* G7 economic powers to meet end-May
MESEBERG, Germany, May 4 (Reuters) - Japanese Prime Minister
Shinzo Abe and German Chancellor Angela Merkel said on Wednesday
they wanted to avoid turbulence on foreign exchange markets and
Abe said Tokyo would act if necessary.
The yen surged to an 18-month high against the dollar after
the Bank of Japan held off expanding monetary stimulus last
week, defying market expectations for action even as soft global
demand, an unwelcome rise in the yen and weak consumption
threatened to derail a fragile economic recovery.
"We are observing the currency market and if necessary we
will then have to act," said Abe, who was in Germany to prepare
with Merkel for an end-May meeting of the Group of Seven (G7)
economic powers.
"I note that we are seeing very speculative, fast movements
(on the currency markets)," he told reporters, adding that the
Group of 20 leading world economies had already agreed that
targeted political measures to influence currency rates were
undesirable.
"We have said at the G20 that we must aim for stable
currency rates," Abe said.
Merkel said there were no winners from competitive currency
devaluations, adding that the "comparative stability of
currencies to one another is of great value".
Bank of Japan Governor Haruhiko Kuroda said on Monday the
yen's recent gains may hurt the country's economy, stressing his
readiness to expand monetary stimulus if the risks threaten to
keep the central bank from hitting its 2 percent inflation
target.