The Group of 20 nations have declared there would be no "currency war" and deferred plans to set new debt-cutting targets in an indication of concern about the fragile state of the world economy.

Japan's policies, which have driven down the yen, escaped criticism in a statement agreed on in Moscow on Saturday by financial policymakers from the G20, which groups developed and emerging markets and accounts for 90 percent of the world economy.

"So, what the G20 is interested in, notably those representatives from the eurozone, is more stability at a time when growth is very fragile" - Stephen Barber, political economist

After late night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates.

A draft communique seen by delegates on Friday had steered clear of the G7's call for fiscal and monetary policy not to be targeted at exchange rates but the later version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed at price stability and growth.

"The language has been strengthened since our discussions last night," Jim Flaherty, Canadian finance minister, said.

"It's stronger than it was, but it was quite clear last night that everyone around the table wants to avoid any

sort of currency disputes."

Japan not singled out

The communique did not single out Japan for aggressive monetary and fiscal policies that have seen the yen drop 20 percent.

The statement reflected a substantial, but not complete, endorsement of Tuesday's statement by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy.

"We all agreed on the fact that we refuse to enter any currency war," Pierre Moscovici, French finance minister, said.

The text also contained a commitment to credible medium-term fiscal strategy, but stopped short of setting specific goals.

The G7 has long been the powerhouse of financial diplomacy. But tension between the US and Japan has risen over an attempt by Shinzo Abe, Japan's new prime minister, to end two decades of deflation.

The G7 issued a joint statement on Tuesday reaffirming "our longstanding commitment to market determined exchange rates".

Yet the show of unity was quickly undermined by off-the-record briefings critical of Japan.

Fiscal strategies

A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in September.

"Advanced economies will develop credible medium-term fiscal strategies ... by the St Petersburg summit," the communique said.

The US says is on track to meet its Toronto pledge but argues that the pace of future fiscal consolidation must not snuff out demand. Germany and others are pressing for another round of binding debt-cutting goals.

In a policy speech last month, Shinzo Abe said Japan would not continue stimulus spending 'forever'

Backing in the communique for the use of domestic monetary policy to support economic recovery reflected the US Federal Reserve's commitment to monetary stimulus through quantitative easing, or QE, to promote recovery and jobs.

QE entails large-scale bond buying - $85bn a month in the Fed's case - that helps economic growth but creates money, much of which has leaked into emerging markets, threatening to destabilise them.

That was offset in the communique by a commitment to minimise "negative spillovers" of the resulting financial flows that emerging markets fear may pump up asset bubbles and ruin their export competitiveness.

Russia, this year's chair of the G20, said the group had failed to reach agreement on medium-term budget deficit levels and also expressed concern about ultra-loose policies that it and other big emerging economies say could store up trouble for later.

Anton Siluanov, Russian finance minister, said a rebalancing of global growth required more than an adjustment of exchange rates.

Stephen Barber, a political economist from the London South Bank University, told Al Jazeera that "unlike shares you cannot devalue all currencies in the world, all at the same time."

"So, what the G20 is interested in, notably those representatives from the eurozone, is more stability at a time when growth is very fragile."