* FX rates should not be decided by speculative moves
* Japan authorities could take proper steps at proper time
* BOJ should do enough to prevent economic recession
* Japan extra budget won't require new bond issuance
* Japan can keep fresh government bond cap in 2011/12 (Adds quotes, background)
By Linda Sieg
TOKYO, Oct 2 (Reuters) - Recent currency market moves are too rapid and too speculative and the yen is becoming too strong, too fast, causing serious damage to Japan's economy, Japanese Chief Cabinet Secretary Yoshito Sengoku said on Saturday.
Japanese authorities, worried that the yen's rise would derail an export-driven recovery, intervened in the currency market on Sept. 15 for the first time in over 6 years after the yen jumped to a 15-year high against the dollar.
The dollar traded at about 83.25 yen in New York on Friday, edging closer to a 15-year low of 82.87 yen hit last month. Traders say a fall below that level may trigger intervention.
"The appropriate level is something basically to be decided by the market. But it should not be decided by speculative moves, but reflect the real economy," Sengoku, the de facto No. 2 in Prime Minister Naoto Kan's cabinet told Reuters in an interview.
"If the exchange rate is one that settles down gradually, we would not reject that. But I think that the current moves are too speculative and as a result the yen is rapidly becoming too strong," he said.
Sengoku refrained from saying whether Japan would intervene again, but said authorities could take "appropriate action at the appropriate time."
Kan needs to keep Japan's economy afloat without ballooning a public debt already twice its $5 trillion economy and wants opposition parties, who control parliament's upper house, to join in talks on an extra budget for fiscal 2010/11 to March 31.
Kyodo news agency said on Friday that government and ruling party were set to compile a 5 trillion yen ($60 billion) extra budget, but Sengoku said only that it was likely to be more than 3 trillion.
"The government and ruling party will craft proposals and if possible discuss with the opposition parties but in principle, this will not mean the issuance of fresh bonds or further debt," he said.
Sengoku also said that the government could stick to its self-imposed cap of around 44.3 trillion yen in fresh bond issuance for the next fiscal year from April. Analysts say the government could struggle to hold down fresh debt due to the rising social security costs of a fast-ageing population.
Sengoku also said government hoped that the Bank of Japan would take sufficient steps to prevent the economy from slipping into recession. The central bank's policy board is leaning toward easing monetary policy at an Oct. 4-5 meeting, but it is hardly a done deal. (Reporting by Linda Sieg and Yuko Yoshikawa, editing by Jonathan Thatcher)