The Bank of Japan policy-setting panel began a two-day meeting Thursday that is expected to focus on how the yen’s recent appreciation will affect the nation’s budding economic recovery.

There is growing concern over the strength of the yen, which rose to near three-year highs against the dollar recently, raising concerns over Japan’s export-driven economic recovery scenario, which is riding on a stronger-than-expected recovery in the U.S. and East Asian economies.

But analysts said this alone is unlikely to prompt the central bank to further ease its monetary grip, given the recent steadiness of the stock and bond markets.

Several economic indicators have also underlined an improvement in the economy. The BOJ’s latest quarterly “tankan” business sentiment survey shows the majority of major Japanese manufacturers are feeling optimistic, the first time this has happened in 33 months.

The influential survey, released Oct. 1, shows small companies also reported an improvement in business sentiment.

Given these positive signs and the relative calmness of financial markets, analysts said they see no need, at least at this stage, for the BOJ to further ease its ultra-easy monetary policy.

The BOJ is expected to keep a close eye on foreign-exchange movements and refrain from adopting fresh policy tools unless the dollar falls far below 110 yen.

The dollar has fallen sharply since the Group of Seven nations called for more flexibility in the foreign-exchange market in their Sept. 20 talks in Dubai. At 5 p.m. Thursday, the U.S. currency was quoted at 109 yen.06-08 in Tokyo, the lowest level in nearly three years.

The BOJ Policy Board is meanwhile expected to extend to one year from the current six months the maturities of government securities it buys in repurchase operations.

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