Japanese policymakers are becoming alarmed at persistent yen rises and considering solo currency intervention as an increasingly viable option for the near term, sources with knowledge of the matter said on Tuesday.
"Anxiety is running high. It can happen any time," one of the sources said, on the possibility of solo intervention.
Another source confirmed this view, saying that authorities were prepared to act when the timing is right. Both spoke on condition of anonymity due to the sensitivity of the matter.
The yen rose to a four-month high against the dollar on Tuesday, pressured by a deadlock in Washington in debt talks aimed at averting a technical default on U.S. government bonds.
Policymakers say the fact that the yen rise is driven by external factors is no excuse to hold off on intervention, and worry that Japan's economy is still too weak to withstand the pain from yen gains.
Whether Tokyo will indeed step into the market and if so, when, will depend much on the pace of yen rises and whether the moves are accompanied by sharp falls in stock prices, officials say.
But some are wary of intervening now because of doubts about the effectiveness of acting when yen rises are driven by factors beyond Japan's control, and for fear of drawing criticism from Japan's G7 partners. (Editing by Tomasz Janowski and Edmund Klamann)