TOKYO, Aug 7 (Reuters) - The Japanese government is

closely monitoring stock and currency markets and cooperating

with the central bank and other countries, Japan's top currency

diplomat Atsushi Mimura said on Wednesday.

"We've been cooperating with other countries, as well as the

Bank of Japan and other government agencies," Mimura said when

asked about recent financial market routs at an event hosted by

the Nikkei Business magazine.

He also stressed that there have been no major changes in

Japan's economic fundamentals, saying that the Japanese economy

is likely to recover modestly.

When asked specifically about current foreign exchange

rates, Mimura said he doesn't have specific levels in mind.

"We're focused on volatility, as excessive volatility raises

uncertainties for businesses," he said.

"It's desirable for currencies to move in a stable manner

reflecting economic fundamentals," he added.

The yen has faced high volatility in recent weeks.

It fell on Wednesday after an influential Bank of Japan

official played down the chances of a near-term rate hike,

though it remained far above its 38-year low of 161.96 per

dollar hit in early July.