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A woman counts Japanese 10,000 yen notes in Tokyo, in this picture illustration. Image Credit: REUTERS

The yen fluctuated near the closely-watched 145 per dollar level Wednesday after an overnight slide on increased bets of Federal Reserve rate hikes sparked further verbal intervention from Japan.

Japan's currency weakened almost 0.3% to 144.96 early in the Asian session before erasing losses to trade little changed around 144.55. Japan's chief currency official Masato Kanda said that the government won't rule out any options in responding to foreign-exchange moves.

'Very sudden'

A break of 145 would bring 146.78 into play, the level reached before a joint Japan-US intervention to support the yen back in 1998.

"We're concerned that the recent foreign exchange moves are very sudden," Kanda told reporters Wednesday. "We'll monitor the situation with a sense of urgency, and respond appropriately without ruling out any options."

Japanese authorities have been stepping up verbal warnings as the yen has fallen but these have failed to halt its decline. While Japan's currency steadied somewhat after BOJ Governor Haruhiko Kuroda expressed concern over rapid yen selling last week, the gain was short-lived.

"We recently saw a concerted effort from the BOJ, MOF and government to jawbone the yen but with limited success," said Matt Simpson, senior market analyst at at City Index in Sydney.

Yen 20% down in 2022

"Part of that success could be attributed to a weaker dollar. With expectations of higher Fed rates and widening yield differentials in favor of the dollar, it could make further jawboning efforts feel like they're shouting into the wind."

Japan's currency has tumbled more than 20% versus the greenback this year due to widening policy differentials between the two nations. Tuesday's US inflation data reinforced bets the Fed will raise its benchmark by 75 basis points at this month's policy meeting. In contrast, the BOJ is forecast to keep rates on hold at its September gathering.