Yen strength is not a major threat for now: Bank of Japan

“At this moment, it is not working as an additional risk factor,” Masaaki Shirakawa told The Wall Street Journal and Dow Jones Newswires when asked whether he felt the yen's current level was a concern.

However, he warned that the currency could rise again, particular as Middle Eastern instability fuels safe-haven demand. “Nobody knows the course of exchange rates,” he said.

Japan's central bank has been closely watching the yen's value since it began to rise sharply in the middle of last year, eroding the profitability of big exporters that help drive economic growth.

Many of Japan's biggest companies recently raised their profit forecasts for the financial year, although the likes of Sony and Honda blamed lower third quarter profits on the yen's sharp ascent.

In August, the central bank said it would offer 10 trillion yen (US$122 billion) in six-month low interest loans in addition to 20 trillion yen from an earlier three-month loan scheme. The added funds helped to suppress the yen.

The BOJ is also weighing the impact of a quantitative easing program it announced in October that includes a five trillion yen asset purchase scheme to lower borrowing costs. It has cut its key rate to between zero and 0.1 percent.

While a strong yen makes Japanese goods more expensive abroad, Shirakawa said the rise in the yen last year helped cushion the impact of rising commodity prices on Japan's economy.

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