The country's former top currency diplomat Mitsuhiro Furusawa said that Japan had little to cheer about a weak yen, which reflects its deteriorating economic fundamentals and trade deficit.
It's not the right tool to curb yen falls, but Furusawa said that recent yen declines might prompt the central bank to raise interest rates.
It's not good if the country's currency keeps sliding, said Furusawa on Thursday, describing the weak-yen trend as a reflection of Japan's waning competitiveness.
He said that the Bank of Japan will keep interest rates ultra-low to ensure inflation continues to hit its 2 per cent target as a result of a weak yen with monetary policy.
Furusawa oversaw Japan's currency policy in 2013 -- 2014 when BOJ Governor Haruhiko Kuroda pushed down the yen and bolstered shares. The yen's real, effective exchange rate, an indicator that captures the international competitiveness of a currency, has dropped to less than half of the peak level of 150 hit in 1995.
The Japanese currency has lost 8 per cent against the dollar in March, falling to a six-year low below 125 on Monday.
Some market players think that 125 yen to the dollar is a level that raises alarm among Japanese authorities, as a previous drop to that level caused verbal warnings from BOJ's Kuroda.
But Furusawa said that the speed of yen moves, rather than the currency's level, was more important for policymakers when it comes to deciding whether to intervene in the market.
The dollar went up to 125 yen on Monday, which was why incumbent currency diplomat Masato Kanda toned up his warning the following day, Furusawa said.
Furusawa, who keeps close to overseas and incumbent Japanese policymakers, said it was meaningless to set a certain line-in-the-sand for currency levels.
After his stint in Japan's finance minister, Furusawa served as deputy director of the International Monetary Fund until 2021. He is currently the president of the Institute for Global Financial Affairs at Japan's megabank SMBC.