Japan on 'red alert' on forex shifts
Japan's Ministry of Finance will be on "red alert" if there are unprecedented moves in the foreign exchange market, a senior official said on Monday, suggesting the ministry was prepared to intervene further to hold the yen down.

"If there are unprecedented moves in the forex market we will be on 'red alert'," said Hiroshi Watanabe, head of the ministry's international bureau, when asked about possible market volatility after a U.S. attack on Iraq or because of other factors.

His comments came after the yen rose to seven-month highs around 116.35 yen to the dollar last Friday as worries over an imminent war in Iraq pummelled the U.S. currency.

The Japanese authorities have been concerned that a runaway rise in the yen could derail Japan's export-led economic recovery and have disclosed that they intervened in January and February.

Watanabe told Reuters in an interview that he had no preconceived idea about what would happen in the market, but said he was carefully watching moves.

On Monday, the yen approached Friday's high again despite a drop in the Tokyo stock market's Nikkei average below the 8,000 mark for the first time in 20 years.

"It's abnormal that the yen strengthens while Japanese share prices drop. That will be undesirable for the Japanese economy," Watanabe said. Market players think Japan does not want to let the dollar fall below 117 yen, and certainly not below 115 yen, seen as a crucial level for Japanese exporters' profitability.