"I see little point in calling for unsterilized forex intervention," said Nagai. "In Japan there is absolutely no scope for a further rate decline."
To be effective, unsterilized intervention would need to be conducted in a more normal economy where short-term interest rates were around 3 percent to 5 percent, he said.
Only last week, the central bank loosened its monetary policy further, pledging to pump more than ?2 trillion into the market every day and cutting the official discount rate to a record low 0.10 percent from 0.25 percent.
Aside from its doubtful impact on the economy, traders say foreign exchange intervention is a far from stable policy tool as it can disrupt markets in other currencies.
Massive fund injections by the Federal Reserve drove down short-term dollar interest rates to near zero for a while after the terror attacks.
But after the central bank stepped into the market, the overnight dollar London Interbank Offered Rate (LIBOR) shot up to near four percent on Monday from 1.9 percent in the middle of last week.
It was at 3.25 percent on Wednesday.
"This is tantamount to soaking up dollar funds given by the Fed, albeit temporarily and partially," Okada said.
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