Koji Omi said it was important to be aware of the risks of making one-way currency bets, echoing warnings from the Group of Seven.
Foreign exchange officials from South Korea and New Zealand also said they were worried about the harm caused by the yen's weakness, compounding concerns about carry trades, in which funds are borrowed in a low- yielding currency such as the yen to invest in higher-yielding currencies.
In mid-morning New York trade, the dollar was down 0.5 percent at 123.11 yen. It was the best day for the yen against the dollar since mid-April.
The euro was down almost 0.5 percent against the yen at 165.66, well off a record high hit last week.
In the United States, purchases of new homes dropped in May, signaling demand is still faltering in the second year of the housing slowdown.
Sales fell 1.6 percent to an annual pace of 915,000 last month from a revised 930,000 rate the prior month that was lower than previously estimated, the Commerce Department said in Washington. The supply of unsold homes at the current sales pace rose.
A jump in mortgage rates this month and a glut of unsold properties on the market will continue to discourage home construction, economists said. The housing slump, already the worst since 1991, will restrain the economy for the rest of the year and potentially into next.
"The deep slump in the housing sector is continuing," David Resler, chief economist at Nomura Securities International in New York, said. "Home construction is likely to remain a drag on overall economic growth through the summer and beyond."
Home prices in 20 metropolitan areas dropped 2.1 percent in the year ended April, the biggest year-over-year decline since record keeping began in January 2001, according to a report from S&P/Case-Shiller. The decline was led by a 9.3 percent drop in Detroit and a 6.7 percent fall in San Diego.
Sales of new homes were down 16 percent from the same time last year.
US consumer confidence fell further than expected in June, to a 10-month low, as Americans grew anxious about jobs and the business climate.
The Conference Board said its index of consumer sentiment slid to 103.9 in June, the lowest since August 2006, from an upwardly revised 108.5 in May.
US stocks gained after concerns eased that losses tied to subprime mortgages will hurt financial company earnings and bond yields held near a three- week low.
The Dow Jones Industrial Average gained 0.1 percent, to 13,363.02 mid- morning. The Nasdaq Composite Index rose 0.1 percent to 2579.82. In commodities, oil prices fell as investors weighed ample fuel stocks in the United States and the potential for higher Nigerian crude exports.
London Brent crude dropped US$1.04 to US$70.32 (HK$548.49) a barrel mid-afternoon. US crude slid US$1.05 cents to US$68.13.
Lead tumbled more than 5 percent as investors sought to cash in profits, traders said.
Lead for three-months delivery on the London Metal Exchange fell to US$2,570 a tonne, down 5.2 percent or US$140 from its close Monday.
Copper for delivery in three months was at US$7,415 a tonne, down 1 percent from Monday, when it rallied on news about strikes in Peru and Chile.
In corporate news, Blackstone Group units tumbled more than 6 percent in morning trade, falling below the US$31 price the private equity giant fetched in its initial public offering last week.
Analysts said the second-day decline was partly tied to investor concern that the private equity market may have run out of steam. Others have also pointed to concerns about Blackstone's lofty valuation and a bill in Congress that would raise the tax rate on private equity firms' profits to 35 percent from the current 15 percent. AGENCIES
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