Former Bank of Japan Governor Haruhiko Kuroda stated on Thursday that the yen could strengthen to around 120-130 against the U.S. dollar, as the interest rate differential between the U.S. and Japan is expected to narrow eventually.

Speaking in an interview in Singapore, Kuroda remarked, "The current exchange rate of approximately 153 yen per dollar is too weak. Sooner or later, the yen will likely rise toward 120 or 130."

He further explained that a scenario where the Federal Reserve cuts interest rates while the Bank of Japan raises rates would naturally reduce the rate gap between the two countries, helping the yen return to levels seen over two years ago.

Kuroda's comments came roughly half an hour before the BOJ, as widely anticipated, announced its decision to keep interest rates unchanged. Kuroda, who introduced ultra-loose monetary policy in 2013, oversaw a decade of massive easing during which the central bank aggressively purchased assets, including bonds, stocks, and real estate funds, while maintaining negative interest rates for years. The task of normalizing monetary policy now falls to his successor, Kazuo Ueda.

Kuroda noted, "The 2% inflation target has been achieved, economic growth is around 1.5%, and the unemployment rate remains low at about 2.6%." He suggested that conditions are now in place for the BOJ to continue raising interest rates.