The yen plunged briefly against the dollar on Friday, spurring market talk that Japan intervened again after a massive campaign the day before to tame the currency, but there was no official confirmation of government action.
The dollar briefly jumped nearly a full yen to around 79.40 with dealers citing government action, but it quickly ceded ground raising doubts among dealers as to whether authorities had intervened or not. A Finance Ministry official declined to comment.
Japan intervened in the currency market on Thursday and eased monetary policy to ease pressure on the export-reliant economy after the yen surged close to a record high this week as investors bought it as a refuge from the fiscal and economic woes in Europe and the United States.
Earlier on Friday, Finance Minister Yoshihiko Noda repeated that he was closely watching yen moves, signaling readiness to continue taming the yen after Thursday's intervention that media said reached a record 4 trillion yen ($50.6 billion).
There's no change to our basic stance that we want to monitor markets closely. It's better to wait for a little while before judging the impact of intervention, Noda told a news conference.
But Noda also said he wanted to spend more time determining the effect of Tokyo's action, a comment which briefly pushed up the yen against the dollar as market players interpreted it as a sign Tokyo may hold off intervention in the near future.
Of course, we have to watch currencies, but the Dow (industrial average) fell a lot, so today I also want to watch the stock market.
The dollar briefly rose above 80 yen on Tokyo's solo intervention on Thursday but has since fallen back to around 78.60 yen.
World stocks plunged to new lows for the year on Thursday with a sell-off in markets accelerating sharply as investors fretted about the outlook for the global economy and piled into safe-haven bonds. The overnight sell-off pushed the Nikkei stock average <.N225> down sharply on Friday.
Noda offered no sign that G7 or G20 financial officials are considering discussing the global slowdown and market instability, or whether Tokyo may be initiating such discussions.
I agree that these subjects should be discussed. We have the G20 meeting in September. I am sure these subjects will come up at a lot of international meetings, Noda said.
Each problem is important, but how to prioritize these issues is something to discuss from here on, Noda said in response to questions whether G20 need to discuss currencies, the sovereign debt crisis and the U.S. economy.
Japanese officials have not been clear on whether they got consent from Japan's G7 counterparts in acting solo in the market.
When asked about the cool reception of officials in Europe and the United States to Japan's intervention, Noda said: We are communicating, but I won't comment on each country's stance.
Economics Minister Kaoru Yosano on Friday warned markets that they should not assume that Tokyo is done stepping into the market, while stressing again the need for Japan, Europe and the United States to adopt common policies to contain the pessimism about the global economy.
Japan probably sold a record 4 trillion yen ($50.6 billion) in an intervention on Thursday, nearly double the amount in the previous solo effort in September 2010, the Nikkei newspaper reported on Friday.
$1 = 78.60 yen)
(Additional reporting by Rie Ishiguro; Writing by Tomasz Janowski)