Japan will take appropriate steps against excessive moves in the yen "without ruling out any options", Finance Minister Shunichi Suzuki said on Wednesday, keeping markets on alert over the chance of yen-buying intervention.
Suzuki told reporters he would not comment on whether Tokyo intervened in the exchange rate market overnight to prop up the yen.
"Currency rates ought to move stably driven by markets, reflecting fundamentals. Sharp moves are undesirable," Suzuki told reporters.
"The government is watching market developments very carefully. We're ready to take necessary action against excess volatility, without ruling out any options," he added.
Japan's top currency diplomat Masato Kanda told reporters earlier on Wednesday that authorities were looking at various factors, including implied volatility, in determining whether yen moves were excessive.
"If currencies move too much on a single day or, say, a week, that's judged as excess volatility," Kanda said.
"Even if that's not the case, if we see one-sided moves accumulate into very big moves in a certain period of time, that's also excess volatility," he said. He declined to comment on whether the overnight yen moves were excessive.
After sliding below the psychologically important 150 per dollar mark, the yen strengthened sharply overnight on Tuesday, leading some market participants to believe Tokyo had intervened to support the currency. The dollar stood at 149.200 yen in Asia on Wednesday.
Japanese authorities are facing renewed pressure to combat a sustained depreciation of the yen, as investors confront the prospect of higher-for-longer U.S. interest rates while the Bank of Japan remains wedded to its super-low interest rate policy.
Tokyo last intervened to buy yen in September and October last year, when the Japanese currency eventually slumped to a 32-year low of 151.94 per dollar.
"We've only taken action that gained understanding, and we think this will remain the case," Kanda said, when asked whether Tokyo can garner support from the United States and other Group of Seven partners on intervention.
Kanda met Prime Minister Fumio Kishida at the premier's official residence on Wednesday, and told reporters after the meeting that the two "discussed the economy in general".
