TOKYO (AFX-ASIA) - The dollar turned higher against the yen in midafternoon trading in Tokyo, supported by short-covering on fears over possible coordinated intervention, dealers said. The US currency was quoted as low as 119.00 yen earlier on fears over the further deterioration of the US economy following the terrorist attacks in the US. But the dollar began to recover after Finance Minister Masajuro Shiokawa said the government will take appropriate action, including market intervention, if the foreign exchange market continues its sharp movements without returning to normal. "The market will pay close attention to any policy response by the US, Japan and Europe following last night's incident," Aozora Bank foreign exchange deputy manager Kazuhiro Nishina said. "Personally, I feel that if the situation in the US worsens further and pressures the dollar, some action will be taken" to prevent the US unit's fall, he said. Shiokawa said he held a 10 minute telephone conversation with US Treasury Secretary Paul O'Neill last night after news of the attack. "We agreed to overcome the current turmoil on the economic fronts," he said, adding that the two countries "agreed to keep in close contact in the areas of the forex market, liquidity for settlement, the securities market and trade." Aozora's Nishina said fears over coordinated intervention is likely to support the dollar at around the 118.00 yen level, although the unit is expected to remain exposed to the downside risk in the wake of the terrorist attacks. In Japan, the Bank of Japan already boosted the outstanding balance of current account to 8.3 trln yen today, far above the targeted level of 6.0 trln yen under the present policy directive. The central bank also said it "intends to take every possible measure to ensure the smooth settlement of funds and the stability of the financial markets, including the provision of ample liquidity." "But it is not certain if there is anything that can be done by the local authority for the sake of the US," Aozora's Nishina said. The euro was firmer thanks to flight-to-safety asset flow following the terrorist attacks in the US, but lost clearer upward momentum due to a lack of follow-through buying, dealers said. "Although it largely depends on how it performs today in the European markets, it seems to be difficult for the euro to immediately test the 0.92 usd level just on this lead," Nishina said.