Bank of Japan governor Toshihiko Fukui is facing calls for his resignation over his links to a fund manager arrested for insider trading.
Toshihiko Fukui is not expected to be waving goodbye to his job
The governor has admitted he invested in a fund set up by Yoshiaki Murakami, who has admitted insider dealing.
Opposition MPs have urged Mr Fukui to step down, but he insists he will ride out the storm.
The scandal comes at a time when the bank needs stability as it moves to end five years of zero-interest rates.
Mr Fukui invested $87,000 in the fund in 1999, before he became the bank's governor, although he kept his investment while holding the top job.
He has been called to appear before a parliamentary committee on Thursday to explain what happened.
The bank was due to discuss plans to raise interest rates this week - but has been urged to wait by the government, which fears the move would suffocate the country's steady economic recovery.
Japan's economy has been showing signs of improvement. In the first quarter of 2006, it grew at 3.1% - the fifth consecutive quarter of expansion.
But its markets took a tumble this week, with the Nikkei index losing 4.1% on Tuesday alone.
Across the globe, markets have slumped in recent weeks, amid concerns over inflation and higher interest rates.
The European Central Bank has raised rates, the Bank of England is expected to do so later this year and the US Federal Reserve is tipped to hike interest rates for the 17th time in a row at the end of June.
Mr Murakami has said he had unwittingly violated insider trading laws in connection with a takeover initiated by Livedoor in 2005.
The former trade ministry official has also said he will resign from his fund, widely known as the Murakami Fund.
His arrest relates to the fund's purchase of Nippon Broadcasting shares from late 2004 to early 2005.
The government has supported Mr Fukai over his links to the scandal. Analysts say that if he can ride out the criticism until the end of the week, when Japanese parliament ends for the summer break, he will keep his job.
It is thought unlikely the affair will have any direct impact on Japan's monetary policy.