The Japanese government and the Bank of Japan will continue to monitor market developments with a sense of urgency and examine what is happening in a "cool-headed manner," its top currency diplomat said Tuesday.

Atsushi Mimura, vice finance minister for international affairs, said senior officials from the government and the BOJ agreed to do "all they can" concerning economic and fiscal management after their meeting on Tuesday, following big swings in the stock and currency markets.

Mimura, who took up the post only recently, said Japan is in contact with its counterparts over the recent market rout, telling reporters that foreign exchange rates should reflect economic fundamentals and move stably.

"The government and the BOJ agreed to communicate and coordinate closely," Mimura said after the tripartite meeting of officials from the Finance Ministry, the BOJ and the Financial Services Agency.

At the meeting, the first of its kind since March, when the yen's sharp drop was a concern, the officials shared views on market movements, particularly share prices.

Mimura declined to pinpoint what had caused the recent market volatility, saying that market participants have cited concerns of economic slowdowns and heightened tensions in the Middle East as triggers for the risk-off mood.

A day after plunging some 12 percent on U.S. recession fears, Japan's Nikkei stock index recovered most of its losses, ending Tuesday around 10 percent higher.

The U.S. dollar marked a turnaround, recovering to the lower 146 yen zone from the 141 zone seen the day earlier.

The volatile moves came after market participants reassessed the strength of the U.S. economy and boosted their bets that the Federal Reserve would have to aggressively cut interest rates to support it.

The government and the BOJ confirmed that Japan's economy remains on a recovery trend, citing some "positive" developments such as robust wage hikes and capital investment by Japanese firms, according to Mimura.

"Market moves should be stable, reflecting fundamentals. There is no change to this stance," Mimura said. "All I can say is that we will monitor market developments closely based on that stance."

Mimura took over the job from Masato Kanda, who oversaw bouts of yen-buying operations to prevent the currency's sharp fall in recent years.

Intense yen-selling has taken a respite after the BOJ raised interest rates in late July and hinted at another increase if inflation accelerates.

The ruling Liberal Democratic Party and the main opposition Constitutional Democratic Party of Japan agreed to hold a special parliamentary committee session in August to discuss market developments and hear from BOJ chief Kazuo Ueda.

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