TOKYO—Japan's finance minister on Thursday escalated his rhetoric about the yen's rising value, while a senior ministry official said the government could intervene to fight the advance at any time.
Having described the yen's move as "a little one-sided" on Wednesday, Finance Minister Yoshihiko Noda told reporters on Thursday morning that it's "far out of line with real fundamentals and is one-sided."
"It would be troubling if this trend takes hold so we will continue to watch the markets carefully," he added.
Still, when the dollar and euro both suddenly jumped against the Japanese currency Thursday afternoon—gains that turned out to be short-lived—few market participants viewed it as a sign the government had stepped in. Investors concluded instead that large-scale buying by a U.S. bank on behalf of a U.S. fund was responsible.
Most market participants see the chance of intervention at this point as low, given the tone of the language from officials, the risk it won't work and the lack of stock-market reaction to the strong yen. Even as the currency has risen, the the Nikkei Stock Average has held quite steady, just below the important 10,000 mark.
The surprise mid-afternoon jump in the dollar and euro took to ¥79.60 and ¥112.93, respectively, from ¥78.65 and ¥111.73 at 0530GMT.
"I don't think it's due to Japanese intervention, but I can't say with 100% certainty," said a dealer with good knowledge of market flows. The dollar and the euro gave up the gains soon afterward, falling to ¥78.84 and ¥111.86.
The senior ministry official and Chief Cabinet Secretary Yukio Edano both refused to say whether the government had stepped in.
The official, however, suggested that market participants were reading too much into the tone of the government language. "It is wrong to think we will not intervene unless we say we will take 'decisive steps,'" he said—a signal that intervention is possible anytime.
In the absence of confirmation from the governnment on Thursday's market action, the wait is on for intervention data, to be released on the last day of the month. For now there's only a string of rumors, including one that the Bank of Japan had conducted rate checks, a step often taken ahead of intervention to demonstrate that officials are watching market moves closely. But several senior Tokyo dealers said they were not aware of any such BOJ calls.
"There are lots of rumors flying around the market after the sharp fall in the yen earlier, and even without any clear signs of intervention, investors are certainly more on edge now that Tokyo could step in at some point," said Satoshi Okagawa, a senior dealer at Sumitomo Mitsui Banking Corp.
As of 0800 GMT, the dollar was at ¥79.04 and the euro was at ¥112.24.
Write to Takashi Nakamichi at takashi.nakamichi@dowjones.com and Takashi Mochizuki at takashi.mochizuki@dowjones.com
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