TOKYO (Reuters) – Japan’s top currency diplomat Atsushi Mimura said authorities are “always watching markets” as a renewed build-up of yen carry trades could heighten market volatility, public broadcaster NHK quoted him as saying in an interview that ran on Friday.

Mimura said yen carry trades built up in the past are likely to have been mostly unwound, according to NHK.

“But if such moves increase again, that could heighten market volatility. We are always watching markets to ensure that does not happen,” Mimura was quoted as saying.

He said authorities stood ready to act if currency moves become extremely volatile and deviate from fundamentals in a way that cause demerits to companies and households, according to NHK.

In July, Mimura took over as vice finance minister for international affairs, a role that oversees Japan’s currency policy, succeeding Masato Kanda.

Yen carry trades, which involves borrowing yen at a low cost to invest in other currencies and assets offering higher yields, built up on expectations the Bank of Japan will keep interest rates ultra-low, and were partly behind the Japanese currency’s slide to near three-decade lows in early July.

The vast unwinding of such trades, caused in part by the BOJ’s decision on July 31 to raise short-term interest rates, have recently led to a sharp rebound in the yen.