Japan is in danger of falling into a recession as the yen's decline reduces the purchasing power of households and squeezes corporate profits, according to a former deputy governor of the Bank of Japan.

"The current yen weakness is slightly excessive," Kazumasa Iwata, the deputy from 2003 to 2008, said in an interview last week in Tokyo. " 'Abenomics' entails the risk of 'beggar thyself' consequences and signs are already emerging."

The yen is trading near a six-year low against the dollar as diverging monetary policies from the U.S. to Japan threaten to increase exchange-rate volatility.