Japan issued a fresh warning over the yen's rise to a four-month high Wednesday with the finance ministry saying recent moves in the currency had been one-sided.
But few expect Tokyo to intervene in the currency market any time soon with share prices holding up and Japan's economy recovering from the effects of the March 11 earthquake.
Escalating worries that contagion from Greece's debt crisis could force more European countries to seek financial aid have pushed the Japanese currency higher against both the dollar and the euro, as investors sought it as a safe haven.
"I think the movement has been a little one-sided and I will closely watch markets today as well," Finance Minister Yoshihiko Noda told reporters. Asked whether Tokyo would step into the market, he said: "I can't comment on intervention."
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Economics Minister Kaoru Yosano also said volatile currency moves were undesirable but added that yen levels should be set by markets and that current rises reflected worries over Europe's debt woes, signalling that no intervention was imminent.
The yen has been rising since the release of disappointing US jobs figures last Friday and hit 78.48 to the dollar on the EBS platform. In early afternoon Tokyo trade, it was around 79.40.
While they hope to keep speculation of intervention alive, Noda has refrained from using the stronger wording that Tokyo will take "decisive action" when needed — a phrase seen by markets as signalling that intervention may be imminent.
The yen spiked to a record high of 76.25 yen to the dollar in the aftermath of the quake on speculation that Japanese firms would repatriate some of their huge foreign assets to pay for reconstruction, triggering joint G7 action to curb the currency.