(BSS/AFP) - Japan`s finance minister said Tuesday that Tokyo was ready to take "resolute measures" as the yen came within a whisker of its 40-year low against the dollar.

The currency has been sliding for several years and has come under renewed pressure because of the Middle East war and the gap in US and Japanese interest rates.

Japan and the United States "are in a firm agreement that we would take resolute measures whenever necessary", Finance Minister Satsuki Katayama said after talking to US Treasury Secretary Scott Bessent, a conversation confirmed by the Japanese government.

The comments suggest Japan is prepared to intervene again in financial markets to support the yen, having spent more than $70 billion doing so last month.

Reports about the conversation with Bessent on Monday helped the yen recover from a low of 161.93 per dollar, just short of the 161.96 last seen in December 1996.

It was sitting around 161.60 during Tuesday afternoon trade in Tokyo.

That compares with the record high of nearly 75 yen to the greenback touched in 2011.

A weak yen makes imports more expensive for resource-poor Japan, notably for dollar-traded oil.

It has also helped fuel a boom in tourism, with the weak yen making shopping, accommodation and food cheaper for foreign tourists.

Michael Wan at MUFG said that "ultimately the fundamentals of low real interest rates vis-a-vis the US have to change for a durable shift".

The Bank of Japan last week raised rates to a 31-year high but it likely needs to "signal a more hawkish path" to reassure markets that more hikes will come, Wan added. That came in the same week the Federal Reserve took a more hawkish turn and indicated it could lift borrowing costs itself this year.

Further moves upwards by the BoJ could, however, meet resistance from Prime Minister Sanae Takaichi`s government, which is anxious not to snuff out growth with high borrowing costs.