Azumi said Europe’s debt problems were a factor behind fund flows into the Japanese currency, and he urged European leaders to come up with a thorough scheme to resolve the region’s debt crisis at their meeting on Wednesday.

“Sudden rises in the yen do not reflect economic fundamentals and I must judge them as speculative,” Azumi said after a regular cabinet meeting.

“If they become excessive I will take decisive measures.”

The yen’s strength and Europe’s debt woes pose risks to external demand that could hurt export-oriented firms’ profits and weigh on the economy’s recovery from the impact of the March earthquake and tsunami.

The dollar was trading around 76.20 yen on Tuesday, not far from an all-time low of 75.78 yen hit on Friday.

Another risk for Japanese firms is the severe flooding in Thailand, which has halted production in that country by companies including Toyota and Nikon.

At a separate news conference, Economics Minister Motohisa Furukawa said it was necessary to closely watch the impact that the floods could have on Japan’s economy.

The Bank of Japan said it is considering setting up a scheme with Thailand’s central bank to offer funds in Thai baht backed by Japanese government bonds as collateral, to assist funding of Japanese firms affected by the floods.