'People say we have a lot of troubles with a rise in the yen but not everything is bad,' Mr Aso said in a speech to a crowd of hundreds in the street in Tokyo.

'When the yen rises, oil prices decline accordingly,' Mr Aso said. 'We have to consider a positive aspect. It's not fair to say something like Japan could collapse possibly tomorrow.'

The yen has soared against major currencies for the past few weeks on fears of a global recession.

It hit 90.87 against the US dollar at one point in London on Friday, surging to the 90 yen level for the first time since August 1995, while the euro hit a six-year low below 114 yen.

A strong yen makes Japan's exports less competitive and reduces repatriated earnings. Technology bellwether Sony Corp. on Thursday slashed its profit forecasts, blaming a stronger yen, tough competition and the global economic downturn.

Mr Aso said the world's second largest economy was less affected by the crisis than other major economies, hinting that Tokyo was ready to play a key role in tackling it.

'Japan is in good shape. Expectations of Japan from the world are higher than we think,' Mr Aso said. 'Our diplomacy on the back of its economic strength is a powerful means for Japan. We want to move forward with confidence.' -- AFP