By Leika Kihara and Yoshifumi Takemoto

TOKYO, Reuters – Japan doesn’t have much to celebrate with a weak yen. This is due to its declining economic fundamentals, and trade deficit. Mitsuhiro Furusawa, Japan’s former chief currency diplomat, said.

Furusawa explained that although monetary policies are not the most effective tool to stop yen fallings, Furusawa suggested, ignoring speculation that the recent decline in yen might lead the central bank raise interest rates.

Furusawa stated to Reuters that “it’s not healthy if the currency of a country keeps falling” and described the weakness in the yen as a reflection on Japan’s declining competition.

He stated that “reacting to a weakening yen by monetary policy doesn’t make sense” and added that the Bank of Japan would keep its interest rates extremely low to sustainably hit their 2% target.

Furusawa was responsible for Japan’s currency policies in the 2013-2014 period, during which BOJ Governor Haruhikokuroda’s stimulus called “bazooka”, which pushed down the Japanese yen while boosting shares. These remarks reflect changes in the way Tokyo policymakers view a weakening yen, once welcomed by Japan’s export-dependent economy as a boost.

Real, effective currency rates are an indicator of international competition and have fallen to half of their 1995 peak of 150.

In March, the Japanese currency lost around 8.8% to the dollar. It fell below 125 Monday for the first time in six years.

Market players consider 125 yen per dollar a dangerous level. A previous fall to this level has triggered verbal warnings from Kuroda, BOJ.

Furusawa however stated that policymakers should consider the velocity of the yen’s movements more than whether the currency is at a certain level.

Furusawa stated that Monday’s dollar spike of 125 yen to the dollar was “quite large”. Therefore, incumbent currency diplomat Masatokanda lowered his warning on Tuesday.

Furusawa said, “It is meaningless to establish a specific line-in the sand regarding currency levels.” He maintains close contacts with Japanese incumbent and overseas policymakers.

Furusawa was Japan’s finance minister and served until 2021 as the deputy managing director at International Monetary Fund. He currently serves as president of Japan’s largest bank, SMBC, Institute for Global Financial Affairs.