By Stanley White
TOKYO (Reuters) - Japan's finance minister kept up verbal intervention against a rising yen even as a weak dollar won a slight reprieve on Monday due to growing signs that U.S. lawmakers can reach an agreement to avoid a sovereign default.
Japanese officials had become increasingly alarmed that U.S. lawmakers would miss an August 2 deadline for raising the country's debt ceiling due to wrangling over spending and tax cuts, sources told Reuters on Sunday.
U.S. lawmakers said on Sunday they were close to a last-ditch $3 trillion deal to raise the U.S. borrowing limit. Hope for a breakthrough supported the dollar against the yen, but Japan's currency was still near levels that would make policymakers uncomfortable about maintaining competitive exports.
"I feel it's necessary to continue to closely monitor market moves," Finance Minister Yoshihiko Noda told reporters.
Noda declined to comment on the chance that U.S. lawmakers could finalize an agreement that would avoid a sovereign default after weeks of often bitter negotiations.
Against the yen, the dollar climbed to 77.47 yen, from 76.89 late Friday, when it had hit a four-month low around 76.75.
Japanese monetary authorities have indicated that they are prepared to step into the currency market to stem yen rises if they see the moves as driven by speculators and damaging enough to the economy.
It was still uncertain when both chambers of the U.S. congress would vote on the plan to raise the debt ceiling, which could potentially become a source of uncertainty before the August 2 deadline.
(Editing by Tomasz Janowski)