Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa, have discussed the appreciation of the yen over the phone. But not much came of it. The PM didn't ask the central bank to ease monetary policy any further.

The government's chief spokesman says the Prime Minister and central bank governor didn't touch on the issue of currency intervention, disappointing markets which had expected a bolder policy response after the yen's surge to 15-year highs earlier this month. The spokesman says they agreed it was important for the government and the Bank of Japan to communicate closely with each other.

Yoshito Sengoku, Chief Cabinet Secretary said "The Prime Minister called the Governor of the Bank of Japan this morning and exchanged views on the economic and financial situation including foreign exchange. They agreed it's important for the government and the Bank of Japan to communicate closely with each other."

A face to face meeting between the two could be the next step, although there's no timeframe just yet.

Japan's stock market fell to the lowest this year to date, as discussions between the Prime Minister and central bank Governor fail to alleviate worries over the yen hike and the Japanese economy. Bond yields have fallen and the yen has pared gains in recent sessions on speculation the Bank of Japan may try to preempt government pressure for action and further loosen its already ultra-easy policy at an emergency meeting before or shortly after the talks.