Japan PM says BOJ easing a key factor driving FX

Japanese Prime Minister Shinzo Abe said on Monday the central bank's monetary policy is not directly aimed at weakening the yen, but is among key factors driving exchange-rate moves.

He also said buying foreign bonds was a future option for the Bank of Japan, although he stressed that he would not meddle in specific policy measures the central bank takes in trying to achieve its 2 percent inflation target.

Abe repeated Tokyo's stance that the Bank of Japan's monetary easing steps are aimed at beating deflation, not at weakening the yen, countering criticism from some G20 nations that Japan is intentionally trying to drive down the yen with its reflationary policies to boost exports.

But he added the BOJ's policy steps could indirectly result in a weaker yen and boost share prices, helping to lift corporate earnings and nudging companies into raising wages.

"I'm not in a position to comment on an appropriate currency level. Basically, our policies are not aimed at weakening the yen," Abe told parliament.

"Various factors are behind exchange-rate moves. Among them, monetary policy plays a major one," he said.

Abe also said that while Japan will not take steps to manipulate exchange-rate moves, it retains the right to correct excessive rises in the yen.

Japanese shares rallied and the yen fell on Monday after Tokyo escaped direct criticism from its Group of 20 peers at a weekend meeting in Moscow on its aggressive reflationary plans that have weakened the currency.

(Reporting by Leika Kihara)