OSAKA (AFX-ASIA) - Bank of Japan governor Masaru Hayami said the recent sharp falls in the value of domestic equities will not affect the health of banks or other financial institutions significantly. However, he added that the bank will monitor further equity price movements. "We want to watch the future stock moves because lower prices will affect the economy," he told reporters after a business meeting here. He added: "The impact of the stock price declines on the health of financial institutions will not be large. Neither will it cause a large impact on the health of banks." Hayami said that despite the poor performance of the stockmarket, he sees some evidence that recent moves to ease monetary policy are helping companies. "Although the stock and forex markets are not doing well, there are some positive signs, as funding rates for corporate demand are beginning to fall towards the end-September fiscal half." Hayami reiterated his position on foreign exchange policy, adding that conditions are stable enough that the bank can sit back and watch. "At today's speech, what I wanted to say is that it is difficult to manipulate forex levels only between the yen and the dollar. Forex levels cannot be determined by domestic concerns," he said. "The current dollar/yen level is not popping up and down so sharply so we need to watch the market for a little while. The market should itself determine the forex levels," he said. "The US economic slowdown is blamed for the recent weakness in the dollar against the euro and yen. In this situation, we want to keep an eye on how the yen will move in the future," Hayami added. Asked whether there is any conflict between his view of foreign exchange policy and that of Finance Minister Masajuro Shiokawa, he said: "I always keep in close contact with the finance minister about the forex issue.