MARSEILLE, France (Reuters) – The yen took a back seat at the Group of Seven finance ministers' meeting, which grappled with Europe's debt crisis and global economic slowdown, but Japan said it met little resistance to further intervention.
The G7 economic powers gave a muted reaction to Japan's call to endorse its right to unilateral action against speculators pushing up its currency, but Japanese officials and some analysts said the subdued response suggests the G7 could let Japan intervene in the market again if needed.
"We intervened in August and I told the (G7) that we will continue to watch the situation closely and flexibly, and take decisive steps against speculative moves," Finance Minister Jun Azumi told a news conference late on Friday after the G7 talks.
"No countries voiced opinions against our explanation. I believe we gained understanding toward our view on currencies."
A senior finance ministry official said the G7 had not ruled out the chance of solo intervention by Japan.
In the run-up to the meeting, Japanese officials vowed to seek G7 understanding on Tokyo's intentions to counter yen rises that threaten to derail a recovery from the March earthquake which tipped the world's No. 3 economy into recession.
"Japan could not ask for more as it just avoided blunt criticism from other countries against its past intervention," said Masafumi Yamamoto, Japan chief forex strategist at Barclays Capital in Tokyo.
On Saturday, Azumi told reporters that U.S. Treasury Secretary Timothy Geithner had not voiced opposition in an early morning bilateral meeting.
"He was smiling but did not refute. He appears to understand the situation," Azumi said.
LITTLE CHANCE OF CONCERTED INTERVENTION
Japan has conducted three currency interventions over the past year -- one rare co-ordinated action with the G7 shortly after the March 11 disaster and two solo moves.
Yamamoto said further intervention to curb excess volatility
may not meet international opposition as long as it was not done frequently or aimed at guiding currency rates toward specific levels as Switzerland did this week by setting an exchange cap on its soaring currency.
Japan's economy is now recovering from recession, while Europe and the United States face a slowdown, so Tokyo has been having a hard time convincing its G7 counterparts of the need for intervention.
European Central Bank President Jean-Claude Trichet said early last month that currency interventions "have to be made on the basis of a multilateral consensus," signaling displeasure at Japan's solo action on August 4.
In Marseille, Japanese officials including Bank of Japan Governor Masaaki Shirakawa blamed the yen's rise on global economic woes that have been amplified by Europe's debt crisis -- the central topic of debate at the G7 talks.
"Such an argument may have discouraged Europe from being critical of Japan's intervention. As a result, Japan may have gained a free hand in intervening in the currency market," said Takahide Kiuchi, chief economist at Nomura Securities.
Japan faces higher hurdles persuading the G7 of the need for a joint intervention, which is seen as more effective in curbing excess currency moves.
On Friday, the G7 issued a statement that said exchange rates should be determined by markets and pledged: "We will consult closely in regard to actions in exchange markets and would cooperate as appropriate."
"The G7 is not in a situation where it needs to do something about currencies as it focuses on how to balance public finances while facing slowing economy," said Barclay's Yamamoto.
"The foreign exchange market is reflecting debt problems in the West but it is not causing problems. So G7 must be feeling there's no use dealing with currencies to resolve the market situation."
(Editing by Catherine Bremer/Mike Peacock)
But strategists CNBC spoke to say further intervention by the Bank of Japan to weaken the yen is unlikely, even if the Swiss maneuver prompts more safe-haven inflows into the Japanese currency.Jesper Koll, Head of Japanese Equity Research at JPMorgan Securities Japan, says that with the Japanese economy on the rebound, there simply isn't enough urgency among policy makers despite the constant jaw-boning by officials."The real point is: when do corporate profits in Japan get squeezed to such an extent that...you have a national emergency?” Koll noted.“If you look at corporate profit performance, if you look at the exporters, if you look at the machinery companies, if you look at the car companies, you actually do see that they're doing better than expected. So, dollar-yen is in the headline, but it's not really forcing the economic crunch here in Japan.”On Tuesday, the Swiss National Bank said it would cap the Swiss franc's gains against the euro [EURCHF=R Loading... () 
] at 1.20, sending the Swissie plummeting 10 percent against the single currency.According to Kathy Lien, Director of Currency Research at Global Forex Trading, a similar dollar-yen arrangement does not make sense for Japan, especially from a trade perspective."Switzerland can establish a euro-Swiss peg because 70 percent of all their trade is done with the European Union. It does not make sense for the Japanese to establish a dollar-yen peg because less than 20 percent of their trade is done with the U.S.," Lien said. " So having a dollar-yen peg would not achieve the same results as having a euro-Swiss peg for the SNB."The Bank of Japan has conducted two rounds of currency interventions so far this year, the first time in March and subsequently in August. Both rounds failed to keep the yen down for long. On Wednesday, dollar-yen [JPY= Loading... ()