By Takaya Yamaguchi and Makiko Yamazaki

TOKYO () -Japan is closely watching currency market positions, including those built on speculative bets, because volatility in exchange rates is undesirable, its top currency diplomat Atsushi Mimura said on Tuesday.

“We’re definitely watching out for speculative positions on a daily basis as excessive volatility or disorderly currency movement are undesirable, as stated in the G7 agreement on exchange rates,” Mimura, vice finance minister for international affairs, said at a NEXT Newsmaker event.

When asked about the Bank of Japan’s policy-setting meeting this week, Mimura said the government and the central bank were communicating closely every day through various channels.

“I have been conveying my views to them. The BOJ is also likely gathering various information including on markets and the annual wage negotiations,” Mimura said.

The dollar rebounded in choppy Asian trade on Tuesday after U.S. President Donald Trump suggested the United States could impose tariffs on Canada and Mexico in the near future. The U.S. currency regained 0.3% against the Japanese yen to 156.06, after earlier touching a five-week low at 154.90.

A weak yen has been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs, weighing on consumption.

Some analysts blame the BOJ’s ultra-low interest rates and the slow pace of rate hikes for contributing to the weaker yen.

Mimura stressed the need to underpin consumption by turning real wages to positive territory.

“The outlook of real wage is very important. From our perspective, a weak yen would work to push up inflation through higher import costs,” he said.

The BOJ is expected to raise interest rates on Friday barring any market shocks from Trump, sources have told , a move that would lift short-term borrowing costs to levels unseen since the 2008 global financial crisis.