TOKYO, Apr 24 (Reuters) Japanese authorities warned against a rise in the yen on Monday, saying there were volatile movements in currency rates and they would act appropriately in the market if needed.
They also denied a comment by the French finance minister that Tokyo would let markets push up the yen.
The dollar tumbled to a three-month low against the yen on Monday, pressured after Group of Seven (G7) finance ministers called for major exporting nations to let their currencies rise against the dollar to help resolve imbalances, highlighted by the massive U.S. trade deficit and China's booming surplus.
''Given some speculation over the weekend G7 discussion, I see some rough movements in currencies, and I am going to watch those movements with strong interest,'' Vice Finance Minister Koichi Hosokawa told a news conference when asked about a rise in the yen on Monday.
''We would always take appropriate action (if needed) based on our thinking that currencies should reflect economic fundamentals and that excessive volatility is undesirable,'' he added.
A ministry official told Reuters earlier that Tokyo's currency intervention policy is unchanged and denied that it would let markets push up the yen.
French Finance Minister Thierry Breton, speaking at the conclusion of a meeting of a Group of Seven (G7) meeting in Washington at the weekend, said he was convinced Japanese authorities will let markets push up the value of the yen.
''There was no such discussion at the G7 meeting along the line of Minister Breton's remarks,'' the MOF official told Reuters.
Hosokawa declined to directly comment on Breton's remarks but also said the G7 did not express such a view.
The dollar fell to a fresh three-month low just below 115 yen on Monday, down more than 1 percent on the day. It was hovering near 115.12 yen at 0900 GMT.
Finance ministers and central bankers from G7 industrial nations said in a communique on Friday that greater currency flexibility -- code for appreciation -- is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
The G7 statement did not mention the yen.
Japan bought a record 20 trillion yen ($173 billion) worth of foreign currencies -- predominantly dollars -- for yen in 2003 and a further 15 trillion yen worth in the first three months of 2004 in an unprecedented bout of intervention.
Japanese officials worried that a high yen could hurt exporters and derail a nascent economic recovery at that time.
But since then they have stayed out of the market, as Japan's economy has grown steadily, and the yen has fallen of its own accord, thanks to rock-bottom Japanese interest rates that contrast with rising U.S. rates.
Breton has recently become vocal about movements in the Japanese currency as the euro rose against the yen. He said earlier this month that the yen and Chinese yuan were probably not at their fair value.
The euro was hovering around 143 yen on Monday, off an all-time high of 145.51 struck last week.
($1=115.69 Yen) REUTERS ARB HS1554