"Continued weakness of the yen is unlikely; this is clearly the strength of the U.S. dollar. The market has already incorporated the strength of the U.S. dollar so I wouldn't think dollar-yen will go beyond 112 or 113 - It will be in range trading between 107 and 112 in my view," he added.
There have been increasing calls for policymakers to take further action to prop up the Japanese economy, which has been hit hard by a sales tax hike introduced in April. Fresh data on Tuesday showed a mixed reading – retail sales rose 1.2 percent on year in August, while household spending fell an annual 4.7 percent.
The Bank of Japan (BOJ) is due to meet next week and many analysts have penciled in a move from the central bank to ease monetary policy further. But Sakakibara believes BOJ governor Haruhiko Kuroda will reserve his ammunition for now.
"Mr. Kuroda is reserving additional monetary easing until next year because 2015 will probably see the consumption tax raised to 10 percent, so some sluggishness in the economy will be anticipated," said Sakakibara. "Mr. Kuroda will come in that time, likely first half or second half of next year."
The government raised nationwide sales tax to 8 percent from 5 percent in April in a bid to reduce the country's hefty debt pile, estimated to be more than double its gross domestic product.