The government expressed concern Tuesday about the yen's strength in the currency market, saying its sharp rise against the dollar is "obviously one-sided."
But the government fell short of issuing a policy response, even though market participants thought Tokyo might step into the market to stem a further rise of the yen, which could weigh on the economy.
The government will watch the foreign exchange market "with serious attention and extreme caution," Finance Minister Yoshihiko Noda told reporters, noting that recent movements involving the yen are "obviously one-sided."
Noda cautioned that excessive or disorderly moves in the market will have a negative impact on economic and financial stability. But on possible intervention by Japanese monetary authorities, he refused to comment.
The dollar briefly fell below ¥84 in New York early Tuesday local time, a fresh low last seen in 1995. Analysts said the minister's remarks added to market expectations that the government won't take any immediate action to counter the yen's surge, which has damaged the earnings of Japanese exporters.
Like Noda, Chief Cabinet Secretary Yoshito Sengoku said earlier in the day the government will maintain its stance of closely monitoring market developments.
"Our perception of markets and the global economy has not changed at all," Sengoku said in a morning news conference. "We are closely watching market developments, including whether speculative money has been mobilized."
Political parties were more aggressive about wanting to take emergency measures to address excessive market volatility.
Democratic Party of Japan Secretary General Yukio Edano, who held talks with Sengoku over the phone, urged the government to quickly respond to sharp rises in the yen and falling share prices, according to a DPJ lawmaker.