The government is monitoring foreign exchange movements with "a heightened sense of urgency" and an eye on all possible steps, Finance Minister Shunichi Suzuki said Tuesday, as the yen was trading just shy of the psychologically important 150 line against the U.S. dollar.
Suzuki reiterated that Japanese authorities are looking at volatility, not specific levels, when it comes to possible currency intervention, amid market vigilance about another yen-buying, dollar-selling operation.
"It's important that currency movements are stable and reflect fundamentals," Suzuki said at a press conference after a Cabinet meeting. "We will continue to monitor developments with a heightened sense of urgency and respond with all possible measures."
His remarks were the latest verbal warning by Japanese authorities, who often issue multiple warnings before actually intervening in the market.
The weaker yen has been inflating import costs for Japan, which relies heavily on foreign energy and raw materials.
Financial markets have been pricing in a further divergence in the monetary policy paths of Japan and the United States, due partly to the difference in the pace of inflation.
The Bank of Japan has ruled out a near-term shift from ultralow interest rates, in stark contrast with the Federal Reserve that is expected to go ahead with another rate hike by the end of this year.
The dollar has passed the levels at which Japanese authorities stepped in last year to slow the yen's depreciation.
Asked if the 150 mark is a threshold for deciding on intervention, Suzuki said, "Currency levels are not our criteria. It is volatility that matters."
Suzuki acknowledged that the yen's decline has led to the recent bout of inflation in Japan, adding the government will keep tabs on the impact of the depreciation.
The government will compile an economic package later this month to mitigate the pain of rising prices for everyday goods.