Most expect the dollar to continue its rise against the Japanese and German currencies, even if it dips today in reaction to threats of co- ordinated action to realign exchange rates.
The possibility of a concerted move to restrain the dollar was given credence by a meeting between Japanese Finance Minister Hiroshi Mitsuzuka and Robert Rubin, the US Treasury Secretary, early yesterday.
An official said later both men shared concerns over the yen, which has been weak for some time, adding that they had "reaffirmed their commitment to co-operate closely in exchange markets as appropriate".
A separate G7 recommendation on altering the International Monetary Fund's articles to require members to aim for full liberalisation of capital flows is expected to be approved by the IMF today.
Philippe Maystadt, Belgium's finance minister who heads the IMF's interim committee, said on Saturday: "There is an agreement on the broad principle that capital movement liberalisation is beneficial and the Fund could have a useful role in promoting free capital movements."
However, while member states are expected to give the green light to a new allocation of special drawing rights, the IMF's international "currency", to states who have joined since the last issue in 1981, an increase in contributions from older members may prove elusive.
Mr Maystadt said they were close to an agreement on the size of allocation, but added that he did not expect any consensus on increased contributions. Michel Camdessus, IMF managing director, originally asked for double the current rate, but discussions are now thought to be centring on raising them by between 35 and 65 per cent. Any agreements will be put to the Fund's annual meeting in the autumn for final approval.
In the run-up to the G7 meeting, US and Japanese politicians indicated they would have liked to see this weekend produce another statement of intent to prevent the dollar from rising any further. It is up more than 2 per cent against the yen and 3 per cent against the German mark since the G7 said the same thing in February.
Robert Rubin, US Treasury secretary, indicated last week that an increase in Japan's trade surplus with the US would be undesirable. "I think it's very much in their interest and the interest of everybody, and we'll all be watching that very closely," he said.
The weak yen has boosted Japanese exports, but other G7 countries are likely to urge the Japanese government to ensure domestic demand also plays its part in economic growth.
However, most analysts do not expect significant intervention on exchange rates, and do not think it would necessarily work anyway. The currency markets will respond to the possibility of increases in US interest rates.