The yen has hit a new 15-year high against the dollar amid continued uncertainty about whether the government will intervene.
Speaking at an emergency press conference, Japanese Finance Minister, Yoshihiko Noda, declined to comment on any potential currency intervention.
But said that he was monitoring the situation "extremely closely, with grave concern".
The strength of the yen is a major worry as it puts a strain on exporters.
The dollar slid to 84.17 yen, the lowest since 1995 before recovering slightly to 84.47 yen. The yen is also at a nine-year high against the euro.
The strong yen led to heavy losses for Japanese shares on Tuesday. The Nikkei index closed down 121.55 points, or 1.3%, to close below 9,000 points for the first time since May 2009.
Japanese authorities last intervened in the currency in March 2004 and the pressure is on for them to do so again.
The yen's strength and its impact on Japanese businesses was discussed by the Prime Minister and Bank of Japan governor over the telephone on Monday, but so far no action has been taken.
Finance Minister Noda believes that recent currency moves have been one-sided.
The US dollar has been falling because investors are concerned about the health of the global economy and they see the yen as a safe haven at such times.
Japan is among the world's biggest exporters - so each time the value of the currency rises, their goods become more expensive to overseas buyers.