The yen weakened from near a 13-year high against the dollar after the US Federal Reserve slashed interest rates, increasing pressure on Japan's central bank to do the same.

Japan's government warned of possible intervention in the foreign exchange market to bring down the yen, ahead of an expected rate cut by the country's central bank, for the first time in five years as yen's recent gains were abnormal.

Finance minister Shoichi Nakagawa told reporters he would implement appropriate measures with regard to the yen's gains. He said that for export manufacturers the acceleration of the strong yen is a negative factor.

An abnormal rise in the yen ''will have an impact on export-related industries,'' Chief Cabinet Secretary Takeo Kawamura told a news conference.

The intervention to limit the yen's strength is to protect the overseas earnings of Japanese exporters.

US Federal Reserve's near-zero interest rate policy announced yesterday led to the dollar falling to a 13-year low against the yen  and 11-week low against the euro in an attempt  to improve the economic situation. There are speculations that this may lead to reduction in the demand of US assets.

The move put interest rates in US lower than those in the Japan, and the dollar fell as traders started buying the Japanese yen.

A stronger yen makes Japanese exports less competitive overseas. A strong yen lowers profits from goods sold abroad by exporters. Japan has so far done well on the export front but with slowing down of demand overseas, many manufacturers like Toyota Motor Corp, Nissan and Sony Corp, have cut employees and production.

''We will take appropriate measures, including currency intervention, at the appropriate time,'' said government spokesman Takeo Kawamura.

The yen remained near 13-year high, trading at 87.60 yen to the dollar in Tokyo, fell to 87.90 per dollar weaker compared to the dollar trading at 87.95 yen in New York yesterday  and was above 90 yen a week earlier.

In 2003 Japan sold 20.4 trillion yen and 14.8 trillion yen in the first quarter of 2004, when the yen was at its high of 103.42 per dollar.

Analyst  expect the Bank of Japan to cut interest rates from the current 0.30 per cent to a range to between 0 to 0.1 per cent at the two-day policy meeting on Thursday. This would bring Japanese interest rates in line with those in the US.

In response to Federal Reserve's rate cut, central banks around the world in Europe, Middle East and Hong Kong too lowered their interest rate yesterday.