Japan is keeping tabs on factors driving the yen's fall relative to the U.S. dollar and will respond as appropriate to excessive volatility without ruling out any options, Finance Minister Shunichi Suzuki said Friday.

Suzuki told reporters that the government will also take steps to minimize the negative impact of the weaker yen on people's livelihoods and the broader economy after the Japanese currency fell to a new 34-year low of 153.32 in New York overnight.

Financial markets remain vigilant about the possibility of market intervention by Japanese authorities to arrest the yen's rapid depreciation.

A weak yen was once welcomed as a boon to exporters, particularly automakers that form the backbone of the economy, as it boosts their overseas profits in yen terms. In recent years, however, the negative side has become increasingly clear amid higher import costs for energy and raw materials, in a blow to businesses and households.

"Currency movements should be stable, reflecting fundamentals. Excessive fluctuations are not desirable," Suzuki said, adding that he is in "constant contact" with Masato Kanda, the country's top currency diplomat, over market developments.

"It's not just the (foreign exchange) rates we are looking at with a heightened sense of urgency but also the background moves," he said. "We will act appropriately to excessive volatility without ruling out any options."

The yen is on a downtrend as financial markets expect the wide interest rate differential between Japan and the United States to remain.

Its fall beyond 153 against the dollar came after the Bank of Japan's first interest rate hike in 17 years, while the Federal Reserve is now widely expected to take more time before cutting interest rates due to sticky inflation.

Repeated verbal warnings are viewed as preceding actual intervention by Japanese authorities. Japan previously stepped into the market by buying the yen for the U.S. currency in October 2022 after it fell to 151.94, higher than its level of around 153 on Friday in Tokyo.

Suzuki declined to reveal the government's assessment of the factors behind the yen's recent depreciation and whether preparations are being made with Kanda for a fresh yen-buying, dollar-selling operation.

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