Japan's Mr Eisuke Sakakibara, formerly nicknamed "Mr Yen" for his sway over foreign exchange trading, has urged central bank intervention to reverse the yen's recent appreciation.

The former vice finance minister said Japan's monetary authorities should take advantage of thin trading conditions before and after the turn of the year to pull the Japanese currency towards the 110 level against the dollar.

"Trading will be very thin at the end of this year and the start of next year, but (the authorities) need strong interventions," he said in a televised debate on Asahi Broadcasting Corp.

Mr Sakakibara is now a professor at Keio University in Tokyo and is being tipped as a likely a candidate to become the next International Monetary Fund chief.

"The yen's appreciation above 100 (to the dollar) is absolutely negative" for the Japanese economy and corporate earnings, he warned.

"I believe the yen's (current) level at 102 is not good either and there should be intervention to push it down towards the 110 level," he added.

The yen traded at 102.58-62 against the dollar on Christmas Eve in Tokyo, appreciating sharply from around 120 six months ago on expectations for Japan's eventual recovery from the worst post-war recession.

Mr Sakakibara said some two billion dollars spent by the Bank of Japan on Christmas Eve for its yen-selling intervention was timely. But he warned the action would be meaningless unless the Bank of Japan made it un-sterilised intervention, under which excess yen created by the central bank are allowed to stay in the market.

The Bank of Japan has so far taken up funds injected into the market through intervention via daily money market operations.

What the Bank of Japan does on today and tomorrow "will be very important", Mr Sakakibara said.

"The yen's rise will be halted if the BoJ decides not to take the intervention money back, and announces an intention for further policy easing following its intervention on December 24th," he said.

The Bank of Japan governor Mr Masaru Hayami said in a rare statement on December 1st that un-sterilised intervention was among the central bank's options.

"The Bank of Japan has been flexibly providing ample funds to the short-term money market taking account of factors including yen liquidity arising from foreign exchange intervention," the statement said.