TOKYO (AFX-ASIA) - The dollar/yen fell back late morning as fears over intervention eased on comments by Finance Minister Masajuro Shiokawa suggesting action is not imminent ahead of the G8 meeting next week, dealers said. The cross was also helped by the euro/yen's rise on expectations European markets will better weather a global economic downturn than their Japanese counterparts, as well as comments by Japanese officials welcoming the euro's rise, they added. Shiokawa said the finance ministry will closely watch currency movements after the recent rise in the yen but warned that excessive government involvement in the market will cause international friction. "If any country tries to take action to improve its currency position, relative to other nations, it will cause international friction and hurt the rules of the free economy," Shiokawa said. Prime Minister Junichiro Koizumi will meet the other leaders of the G8 countries for a summit in Canada next week after his government has come under criticism from US manufacturers for market intervention to prop up the dollar. The remarks by the finance minister caused the dollar to drop back after the US currency benefited from early fears of possible Bank of Japan intervention. "That had an effect. It did sell off. Also people are noting that the euro/yen is above 119 so that may take some pressure off the dollar/yen," said Kenneth Landon, senior currency strategist at Deutsche Bank. "It's been kind of heavy. People were scared about intervention. (The dollar) popped up but came back down," he said. The euro looks to gain the most from the dollar woes, as Japan's cyclically driven financial markets are being hit by worries over the global economy. Landon noted that a further depreciation in the dollar will put upward pressure on inflation in the US, through increased import prices, increasing the possibility Fed chairman Alan Greenspan will raise rates. "For every single rate hike under Greenspan, the dollar was weaker. He doesn't look at the dollar but the things that cause the dollar to depreciate also lead to higher rates," he said. The slump in the dollar will be negative for the economic cycle. "That's one of the reasons the dollar/yen has not fallen through the 120 level, other than intervention. Still, it's got to be much worse for the dollar. Maybe the euro will be the main beneficiary," he said. Deputy Finance Minister for International Affairs Haruhiko Kuroda also said this morning that the euro's strength was viewed positively by Japan. "We welcome the euro's strengthening against the dollar, as it has so far been undervalued, but for the yen this is not the case. There is no reason for the yen to be stronger against the dollar," he said.