Japan is getting closer to intervening in the yen after a rare joint statement from the government and central bank.

Tokyo (Reuters) -In a rare joint statement, Japan’s government and central bank said on Friday that they were worried about the recent sharp drops in the value of the yen. This was the strongest warning to date that Tokyo could step in to help the currency, which has fallen to levels not seen in 20 years.

Masato Kanda, a top currency diplomat, told reporters after meeting with his Bank of Japan (BOJ) counterpart that Tokyo will “respond flexibly with all options on the table.”

He wouldn’t say if Tokyo could talk to other countries about getting into the market together.

The G7, of which Japan is a part, has had a policy for a long time that currency rates should be set by the market, but that the group will keep close track of currency moves and that big, chaotic changes in exchange rates could hurt growth.

“We have seen sharp drops in the yen and are worried about recent changes in the currency market,” the Ministry of Finance, the Bank of Japan, and the Financial Services Agency said in a statement released after a meeting of their top executives.

Officials from the three institutions meet every once in a while, and most of the time it’s to tell the markets that they’re worried about sudden market moves. But they rarely put out a joint statement with clear warnings about changes in currency.

After the statement, the dollar went down by 0.7%, to 133.41 yen.

“If the yen falls below 135 to the dollar and starts to fall quickly, Tokyo could step in.” When that happens, Tokyo needs to step in, “Atsushi Takeda, the head economist at the Tokyo-based Itochu Economic Research Institute, said this.”

“But Washington won’t join, so it will be a one-man show of force. There’s not much reason for the United States to join Tokyo in intervening. “

Other major central banks are threatening to raise interest rates quickly to fight inflation, but the BOJ has repeatedly said it will keep rates low. This makes Japanese assets less appealing to investors.

The yen fell close to 135.20, which was reached on January 31, 2002, as policy differences grew. For it to get lower than that would be the first time since October 1998.

“A change in policy could potentially slow the pace of depreciation, but right now there appears to be no indication that the Bank of Japan is concerned about inflation or the impact of the weak yen on that,” said Moh Siong Sim, a currency strategist at the Bank of Singapore.

“It (the joint statement) is more of a verbal intervention, and I’m not sure if it will amount to any action.” “It won’t have any effect on the yen,” he said, adding that the bar for real intervention in foreign exchange markets remains very high.

Because the economy depends so much on exports, Japan has always tried to stop sharp rises in the yen and done nothing when the yen fell.

Interventions to buy yen have been very rare. The last time Japan did something to help its currency was in 1998, when the Asian financial crisis caused the yen to drop in value and a lot of money to leave the area quickly. Before that, in 1991 and 1992, Tokyo tried to stop the yen from going down.