TOKYO (Reuters) – Japan’s top currency diplomat Atsushi Mimura said authorities were “always watching the markets” as a renewed surge in yen carry trade could augment market volatility, he was quoted as saying in an interview on Friday by public broadcaster NHK.

According to NHK, Mimura said that carry trades that originated in the past have most likely been mostly resolved.

“But if such movements intensify again, it could increase market volatility. We are always watching the markets to make sure that doesn’t happen,” Mimura was quoted as saying.

According to NHK, authorities are ready to take action if currency movements become extremely volatile and deviate from fundamentals in a way that could result in losses for businesses and households.

In July, Mimura was appointed vice finance minister for international affairs, a position that involves overseeing Japan’s currency policy, replacing Masato Kanda.

Carry trades, which involve borrowing yen at low costs to invest in other currencies and assets offering higher yields, were based on expectations that the Bank of Japan would keep interest rates very low and were partly responsible for the Japanese currency falling to its lowest level in almost three decades in early July.

A massive unwinding of such transactions, prompted in part by the Bank of Japan’s July 31 decision to raise short-term interest rates, has led to a pointed rebound in the yen recently.