Yen is 'not excessively' weak: BoJ's Kuroda

BOJ's Kuroda: Market volatility still quite low
BOJ's Kuroda: Market volatility still quite low

Bank of Japan Governor (BoJ) Haruhiko Kuroda says he's comfortable with the 's recent deprecation, noting the currency is merely in the process of correcting from excessive strength.

The Japanese currency has lost over 6 percent of its value against the U.S. dollar over the past three months amid a strengthening greenback. Earlier this month, it briefly broke through the 110 threshold for the first time in more than six years.

"[The] exchange rate movements are not excessive so far," he told CNBC on Friday on the sidelines of the 2014 IMF/World Bank annual meetings in Washington DC.

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"After the Lehman shock, the U.S. dollar appreciated against many Asian currencies except the Japanese yen. So the current process is a correction of excessive appreciation of the yen," he said.

The market's focus on divergent monetary policies among major economies also underlies dollar strength and yen weakness, he said.

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"The U.S. and U.K. are starting a normalization process while on the other hand the ECB (European Central Bank) and BOJ continue their accommodative monetary policy and that could have some exchange rate implications," he said.

Ongoing yen depreciation has raised concerns among Japan's neighbors, in particular Korea, which worries it could hurt the competitiveness of its export sector.

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Kuroda, however, downplayed the implications of a weaker yen for the rest of Asia.

"I don't think [it] creates any serious problem for the Asian economies, and at this stage as you know Asian economies, particularly East Asian economies are recovering," he said.

Cheaper oil

The precipitous decline in global oil prices will be "very beneficial for the entire Asian economy,"said Kuroda.

"Lower oil prices are good because Asia is the largest oil importer in the world - not just Japan but Korea, China, India, Pakistan even Indonesia now is a net oil importer," he said.

Brent crude oil prices have declined 22 percent since mid-June amid signs of a supply glut.

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Asked if lower oil prices would offset the need for another sales tax increase in Japan – the third largest net importer of oil after the U.S. and China – Kuroda said "no."

"The consumption tax hike is necessary to make Japan's welfare system sustainable. Lower oil prices would benefit the Japanese economy as a whole, that's true, but still I think the fiscal situation in Japan requires strenuous efforts for fiscal consolidation," he said.

Japan is scheduled to raise its consumption tax to 10 percent from 8 percent in October 2015. The tax was raised to 8 percent from 5 percent in April this year.

Financial market volatility

Discussing recent swings in financial markets, Kuroda says while volatility has increased somewhat, the level is still "quite low".

He views the recent global market selloff as a positive indication that the market is not seeing bubble-like characteristics.

Last week, world equities came under renewed pressure as worries about slowing global economic growth darkened the investment outlook.