The government's top spokesman hinted Wednesday that Japan may intervene in currency markets jointly with foreign monetary authorities to prevent a further surge of the yen against the dollar.
"I don't know much (about the possibility of such an intervention), but we will do it whenever necessary," said Chief Cabinet Secretary Yasuo Fukuda, underlining Japan's readiness to sell yen for dollars to stabilize exchange rates.
Fukuda's comment came after the dollar slipped into 115 yen territory Wednesday morning in Tokyo for the first time since February 2001.
It finished the day's trading at 116.21 yen.
Fukuda said a stronger yen could have a severe impact on export-dependent Japanese businesses.
"Just until recently, the yen rate stood at the 120 yen to 130 yen levels (to the dollar)," Fukuda said. "But it suddenly dropped to the 115 yen level. This is a rapid move."
The dollar fell from the 130 yen level at the end of April, then fell through the 120 yen line earlier this month.
Fukuda said he believes the recent surge against the dollar is temporary.
"I believe U.S. economic fundamentals are not as bad as reported and that the current situation is temporary," he said.
Later in the day, Finance Minister Masajuro Shiokawa told reporters the yen-dollar exchange rate has entered an important phase.
The Finance Ministry is monitoring the market closely, while exchanging information with other major countries, Shiokawa said.