"I think the world economy is going to go right down, and it has happened at a time when financial markets are still fragile," said a G7 central banker who declined to be named.
The yen's surge this week was driven by speculation that Japanese firms would repatriate some of their huge foreign assets to help meet insurance claims and pay for reconstruction.
That added to a bullish run for the currency in past years, driven by its status as a "safe haven" since the 2008 financial crisis and investors' use of it as a very low-interest funding currency for more risky investments.
An even stronger yen could make it more difficult for exporters in the world's third largest economy to recover from the triple blow of last week's earthquake, tsunami and nuclear threat. The damage toll is already estimated at up to $200 billion with Japan almost certain to slip back into recession.
"The aim is obviously to support our Japanese partner, express our solidarity and obviously to halt the yen's rise," French finance minister Christine Lagarde told French radio.
"The country has suffered enough catastrophe and calamity to try to avoid, in addition, a deep economic and then financial crisis resulting from a rising currency and preventing the Japanese from exporting as they usually do," she said added.
Investors were also keeping a wary eye on events in Libya as the United Nations voted to impose a no-fly zone over the country and use all necessary measures to protect civilians. French diplomatic sources said military action could begin within hours of the Security Council vote.
Oil prices were up $2 at almost $117 a barrel on the decision, which was seen as risking prolonging the conflict in the North African nation.