TOKYO Reuters -- Bank of Japan Governor Haruhiko Kuroda said on Monday that the yen's recent moves have been quite sharp and could hurt companies' business plans, which is his strongest warning to date of the risks stemming from the currency's depreciation.
Kuroda said there was no change in his assessment that the yen was good for the economy because it boosts the value of profits Japanese firms earn overseas.
He said the yen's drop to around 125-126 yen against the dollar was volatile enough to hurt companies, from around 115-116 yen a month ago.
The recent decline in the yen, which lost about 10 yen to the dollar in about a month, is quite sharp and could make it hard for companies to set business plans, Kuroda told parliament.
He said we need to take into account the negative effects of a weak yen in that sense.
On Monday, traders bought the yen, helping push the dollar down by 0.22% to 126.25 yen.
Kuroda said that the BOJ must maintain its massive stimulus programme in order to support a fragile economic recovery.
The BOJ has kept its low interest rates even as the Federal Reserve plans steady pace of rate hikes, despite the fact that the yen has fallen to two-decade lows against the dollar.
Kuroda, a former currency diplomat, has preached the merits of a weak yen despite growing concern among lawmakers that sharper yen falls may hurt the economy by inflating already rising import costs for fuel and food.
His latest comments are closer to those of Finance Minister Shunichi Suzuki, who warned last week that recent yen falls could be bad for the economy.
A weak yen isn't desirable in a situation like now, when companies have yet to raise prices and wages, Suzuki said. It's a bad yen decline. Suzuki wouldn't say anything when asked if Tokyo was ready to intervene in the currency market to stem yen declines.
Kuroda may have aligned his view a bit closer to the finance minister's view to avoid giving markets the impression that the two aren't seeing eye to eye on the issue, said Takeshi Minami, chief economist at Norinchukin Research Institute.
I don't think the BOJ will do anything to influence currency rates because that's something beyond its mandate.