MOSCOW – A draft communique prepared for Group of 20 finance leaders will omit part of this week's Group of Seven statement declaring fiscal and monetary policy must only be used for domestic economic aims, a G20 delegate said. It will merely stick to previous G20 language on the need to avoid excessive foreign exchange volatility. The G20 leading economies intend to reaffirm their commitments to draw up credible medium-term fiscal plans but will also make allowance for the near-term economic situation facing some countries, a G20 delegate said after negotiations Friday. The key paragraphs of the draft hammered out after several hours of talks make no direct mention of fiscal targets, in response to US pressure, and also do not repeat G7 language from earlier this week pledging not to target certain foreign exchange rates, the official said. If adopted by G20 finance ministers and central bankers Saturday, the wording will confirm that Japan will escape any censure for its expansionary policies which have driven the yen lower and drawn demands for action from some quarters. One senior G20 source said any reference to targeting exchange rates was not be acceptable to China, which is now the world's second-largest economy and holds much of its $3.3 trillion in foreign reserves in US Treasury bonds. The currency market was thrown into turmoil this week after the Group of Seven powers — the United States, Japan, Germany, Britain, France, Canada and Italy — issued a joint statement stating that domestic economic policies must not be used to target currencies. Tokyo said that reflected agreement that its aggressive monetary and fiscal policies were appropriate but the show of unity was shattered by off-the-record briefings critical of Japan. “There is no competitive devaluation, there are no currency wars,” Russia's finance “sherpa”, Deputy Finance Minister Sergei Storchak, told reporters. “What's happening is market reaction to exclusively internal decision making.” Australian Treasurer Wayne Swan indicated support for Japan's monetary policy, saying “everybody's got a stake” in its ability to foster growth. The yen has fallen by around 20 percent since November. But it hit a two-week high against the euro on Friday on speculation the next Bank of Japan governor may be less inclined to pursue aggressive monetary easing and as markets awaited for the G20 summit to pronounce. Bank of Japan Governor Masaaki Shirakawa said he would defend Tokyo's bold approach to monetary easing, saying the policies were aimed at stabilizing the domestic economy. He also said the bout of yen weakness merely reflected receding risk aversion among investors globally. — Agencies