TOKYO- Japan Finance Minister Shunichi Suzuki said on Tuesday the government will continue to analyze the impact of the strengthening yen on the economy and respond appropriately.

“Our stance has been that currency rates should be determined by markets reflecting fundamentals, but rapid fluctuations are not desirable,” Suzuki said, speaking in a regular post-cabinet meeting news conference.

The US dollar fell to a more than one-year low versus the yen, trading below the key 140 mark on Monday on speculation the Federal Reserve could deliver a 50-basis-point interest rate cut at its policy meeting this week.

Suzuki said the stronger yen could affect the economy both positively and negatively through various channels, such as overseas sales of exporters and import costs on households and businesses.

He noted that the yen has been trading above an average 145 to the dollar that Japanese firms assume for the second half of the fiscal year, but their earnings and financial conditions have been generally healthy.

“In the meantime, we will continue to accurately analyze the impact of foreign exchange fluctuations and price movements on the economy and people’s lives and respond appropriately,” he said.

The Bank of Japan will continue to raise interest rates if inflation moves in line with its forecast, policymaker Junko Nakagawa said, signalling that last month’s market rout has not derailed the bank’s plan to hike borrowing costs steadily.

But the central bank must take into account the impact that such market moves could have on the outlook for the economy and prices when considering whether to raise rates, she added.

Her comments pushed up the yen as markets took them as a renewed sign the BOJ could raise rates in coming months.

“Given real interest rates are currently very low, we will adjust the degree of monetary support, from the standpoint of sustainably and stably achieving our 2 percent inflation target, if our economic and price forecasts are met,” Nakagawa said in a speech to business leaders in northern Japan on Wednesday.

Core consumer inflation hit 2.7 percent in July and has been at or above the 2 percent target for 28 consecutive months.

Nakagawa’s remarks follow those by another member of the BOJ’s policy board, Hajime Takata, who said last week the BOJ must stay on course to raise rates – but tread carefully to ensure volatile markets do not badly hurt businesses.