Bank of Japan Deputy Gov. Hirohide Yamaguchi said Sunday that the yen's strengthening won't necessarily hurt the Japanese economy.
Yamaguchi said he's worrying about the currency's recent gains, declining to comment on whether the central bank will step into the market to slow or reverse the yen's appreciation. He spoke in Beijing on the sidelines of a forum.
The yen reached a post-World War II high versus the dollar last week, spurring speculation the Bank of Japan will move to weaken the currency as concern global growth is faltering fuels demand for refuge.
The struggling dollar dropped against the yen amid speculation Federal Reserve Chairman Ben S. Bernanke may say this week at a high-profile conference in Jackson Hole, Wyoming, that added measures might be needed to support the economy.
The yen appreciated 0.2 percent to 76.55 per dollar in New York on Aug. 19, after touching a postwar high of 75.95.
The U.S. and Europe are "dangerously close to recession," Morgan Stanley analysts wrote in a report Thursday. "Recent policy errors, especially Europe's slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets," the report said.
The yen has climbed beyond the level that prompted the Bank of Japan to sell it on Aug. 4 to arrest its gains. A stronger yen slashes the value of overseas income at Japanese companies.
Finance Minister Yoshihiko Noda signaled last week, before the yen reached the postwar record, that he's ready to make another "surprise" intervention in markets. Noda said he would "keep monitoring markets carefully."
The yen has gained 5.6 percent over the past three months, making it the second-best performer among 10 major-economy currencies tracked by Bloomberg Correlation-Weighted Currency Indexes.