NEW YORK (Bloomberg) — The yen may fall after the Group of Seven industrial nations stopped short of saying that the currency’s weakness is a threat to the global economy.The Japanese currency is trading near a record low against the euro and the weakest in four years versus the dollar as the Bank of Japan holds interest rates at 0.25 percent, the least among major economies. At a meeting in Essen, Germany, G-7 officials sought to reconcile Europeans who want the yen to strengthen with the US and Japan, which say the market should set exchange rates.

“At the G-7 there wasn’t anything specific on the weakness of the yen,” said Tony Morriss, currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “The yen will probably slide in the short term.”

The yen bought 121.77 per dollar at 7.49 a.m. in Sydney from 121.71 per dollar on February 9 in New York. Japan’s currency traded at 158.27 per euro from 158.31. The dollar traded at $1.2996 per euro from $1.3008. The Japanese currency lost 0.5 percent last week against the dollar as the yen declined versus 15 of 16 most- traded currencies tracked by Bloomberg.

Finance ministers and central bankers from the G-7, in a communiqué released at the close of their meeting on February 10, urged investors to recognise that Japan’s economic recovery is “on track”. The statement didn’t refer to weakness in the yen.

European Central Bank President Jean-Claude Trichet told reporters after the meeting that the G-7 still wanted to warn against making “one-way bets” in the foreign-exchange market.

The yen is the world’s worst-performing currency in the past month as investors borrow cheaply in Japan and exchange the funds to buy higher-yielding assets abroad, known as the carry trade.

It reached a four-year low against the pound and the weakest in almost a decade versus the Australian dollar last month after the BOJ unexpectedly decided against raising benchmark borrowing costs. The Bank of England lifted rates in January to a five-year high of 5.25 percent, and Australia’s benchmark is 6.25 percent.

The depreciation has raised concerns among some officials and companies in Europe. ECB board member Christian Noyer said the value of the yen didn’t reflect the strength of the country’s economy, Japan’s Nihon Keizai newspaper reported.

Hermes International SCA of Paris, the maker of Kelly and Birkin handbags, on February 8 said the weak currency was eroding revenue from Japan when it’s converted back into euros.

Sustained attacks on the carry trade from Europe may help the yen rebound from a four-day slide versus the euro and boost fluctuations in exchange rates that increase the risk of losses for investors betting on a further decline.

The trades are “not appropriate” now, Trichet said in Essen. German Finance Minister Peer Steinbrueck told reporters there may be a “need to talk” further if the yen keeps falling.

“G-7 officials were concerned,” said Brian Dolan, research director at Forex.com, a unit of online trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million in funds under management. “There’s going to be a two-way trade on the yen instead of one-way bets. I see a good chance of buying.”