The Bank of Japan starts a closely watched two-day policy meeting on Monday. The market focus is on any further signals about a possible shift in the bank's ultra-loose monetary stance.

Investors speculate the central bank is laying the groundwork to end negative interest rates. This follows comments by BOJ Governor Ueda Kazuo earlier this month in the Diet.

Previously, Ueda said the bank will maintain negative short-term interest rates and yield curve control until its 2-percent inflation target is reached and remains stable.

He added that the BOJ will await the results of annual wage negotiations next spring before making major policy decisions.

However, on December 7th during a Diet session, Ueda said monetary policy management will become even more "challenging" from the year-end.

This remark triggered speculation that the BOJ may shift its stance on interest rates sooner, which caused the yen to strengthen against the dollar.

Investors noted that in the BOJ's last meeting in October, one board member said the bank needs to be transparent about any plans to change monetary policy.