By Satoshi Sugiyama and Leika Kihara

TOKYO Japan won't rule out any options in addressing excess volatility in currency markets, the government's top spokesperson said on Thursday, issuing a fresh warning against the yen's decline towards the psychologically important 150-mark per dollar.

Chief Cabinet Secretary Hirokazu Matsuno also said he hoped the Bank of Japan, holding a two-day policy meeting that ends on Friday, takes "appropriate" policy towards achieving its 2% inflation target.

"It's important for currencies to move stably reflecting fundamentals," Matsuno told a regular briefing, when asked about the yen's recent declines.

"The government will monitor currency market developments with a high sense of urgency, and respond appropriately without ruling out any options," he said.

A hawkish pause by the U.S. Federal Reserve pushed the Japanese yen down to around 148.39 against the dollar on Thursday, near the 150 level seen as Tokyo's line-in-the-sand for possible currency intervention.

Matsuno's remarks echo those by top currency diplomat Masato Kanda, who told reporters on Wednesday the authorities "won't rule out any options if excessive moves persist."

Kanda also said Tokyo was in close contact with Washington on currencies, shortly after U.S. Treasury Secretary Janet Yellen signalled any intervention should be aimed at smoothing out volatility - rather than influencing exchange-rate levels.

While a weak yen gives exporters' profits a boost, it has become a political headache for the government as it hurts households by driving up the cost of living.

Japan made rare forays into the currency market to prop up the yen in September and October last year to stem a plunge in the currency that eventually hit a 32-year low of 151.94 to the dollar.

Under pressure to address the fallout from a weak yen, the BOJ also took steps in July to allow long-term interest rates to rise more reflecting the prospect of higher prices.

Many analysts expect the BOJ to keep ultra-loose policy intact on Friday, and will focus on any hints Governor Kazuo Ueda could drop on the timing of a future interest rate hike at a post-meeting briefing.

The government, not the central bank, holds jurisdiction over currency policy in Japan, and decides whether and when to intervene in the exchange-rate market.

(Reporting by Kaori Kaneko, Satoshi Sugiyama and Leika Kihara; Editing by Christian Schmollinger and Jacqueline Wong)