The Bank of Japan's next policy move may be to raise its bond-yield target to keep the yen from weakening too much, according to a BOJ adviser and longtime associate of Gov. Haruhiko Kuroda.

While the yen has strengthened this year, Masahiro Kawai said in an interview Monday that the central bank needs to be prepared for a possible overheating of the U.S. economy that could quickly weaken the Japanese currency.

"The BOJ would want to stop that before the yen gets too weak," said Kawai, adding that such a move wouldn't indicate a policy exit. "The limit is maybe ¥125 per dollar — ¥130 is obviously excessive."