Bank of Japan Governor Kuroda Haruhiko said the yen's sharp fall has a negative impact on households and smaller firms, and that the BOJ will closely monitor the situation.

"We need to consider that excessive rapid fluctuations in exchange rates have a negative impact on the economy by raising uncertainty," the central bank chief said.

Japan's currency has lost nearly 10 yen to the dollar in about one month. The BOJ's ultra-low interest-rate policy contrasts with higher US rates, which is prompting investors to dump the yen.

The yen's rapid drop is causing import prices to soar.
Kuroda said this will increase the burden on households, and hurt the earnings of smaller firms which cannot pass on the higher costs.

But he said the BOJ has not changed its overall view on the currency, and that the bank believes a weaker yen is a plus for the economy as a whole.

Kuroda said higher energy costs are mainly driving the current price increases.

The central bank chief said the BOJ will continue its monetary easing measures, which are aimed at bolstering real-term household income and corporate profits.