Tokyo - It is not appropriate for Japan to tap its foreign exchange special reserves to fund additional spending, the government's top spokesman said on Thursday.

Chief Cabinet Secretary Hirokazu Matsuno made the comment to reporters at a regular briefing, when asked if Japan could consider using unrealised profits from its forex special reserves to fund stimulus.

Matsuno said the reserves were "for the stability of the foreign currency market". He added that the use of such assets for government spending would lead to effective intervention in the currency market as it would require the selling of dollars to buy yen.

The special reserves are a budget account that manages Japan's forex reserves.

Such a move would not be in line with Group of Seven (G7) and other international mutual agreements that have said intervention should be deployed to calm markets in times of excessive volatility.

At the end of March the government held 158.2 trillion yen ($1.08 trillion) in its foreign currency special reserves with an unrealised gain of 1 trillion yen.

Japanese authorities intervened in the currency market last month to sell dollars and buy yen for the first time in 24 years, spending 2.8 trillion yen to slow a rapid slide in the currency that Tokyo considers a threat to the economy.

That helped stop the sell-off in the yen although it has since returned and was on Thursday pinned near 1998 levels.

($1 = 146.7700 yen)

(Reporting by Kazuhiko Tamaki; Writing by David Dolan Editing by Gareth Jones)