Bank of Japan Governor Kazuo Ueda said on Thursday the central bank will "seriously" take into account foreign exchange-rate moves in compiling its economic and price forecasts.
On monetary policy, Ueda reiterated that the BOJ will reach a decision "meeting by meeting" on the basis of information that becomes available.
There is still a month to go until the BOJ's next policy meeting in December, he noted, adding that there will be more information to digest by then.
The weak yen - which had pushed up import costs and inflation - was among the factors that led to the BOJ's decision to raise interest rates in July.
"We do seriously take into account exchange-rate movements in forming our economic and inflation outlook including the question of what's causing the exchange-rate changes that are taking place at the moment," Ueda said at an Europlace Financial Forum in Tokyo, when asked about the impact of currency moves.
Ueda did not make remarks on monetary policy in a prepared speech delivered at the forum, which focused on how technological innovation could create financial system risks.
The dollar fell 0.47% to 154.65 yen and the yield on the 5-year Japanese government bond (JGB) rose 4 basis points to 0.75%, the highest since June 2009, after Ueda's remarks as markets interpreted them as signalling the chance of a rate hike next month.
The dollar's recent rally, caused in part by market expectations that U.S. President-elect Donald Trump's proposed inflationary policies could prevent the Federal Reserve from cutting rates too much, has pressured the yen lower.
Ueda said it was too hard to predict how Trump's policies could affect Japan's economy.
"As soon as the new administration announces new set of policies, we would like to incorporate into our economic outlook," Ueda said.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was on the cusp of durably achieving its 2% inflation target.
Ueda has signalled the bank's readiness to raise rates again if the economy and prices move in line with its forecast.
