* Japan abiding by G7, G20 agreements - government spokesman
* BOJ not targeting foreign exchange - top currency diplomat
* PM Abe defends BOJ policy as needed to reflate economy
* Japan sees no reason to be criticised by Trump
* Trump remarks won't bind BOJ's hands on policy - ex-BOJ's Momma (Adds comment from Abe, detail)
By Leika Kihara and Tetsushi Kajimoto
TOKYO, Feb 1 (Reuters) - Japanese policymakers hit back on Wednesday at U.S. President Donald Trump's accusation of currency manipulation, stressing that Japan was abiding by a Group of 20 agreement to refrain from competitive currency devaluation.
Prime Minister Shinzo Abe defended the Bank of Japan's massive stimulus programme, saying it was intended to reflate the economy and was not currency manipulation.
"Bold monetary easing is a necessary policy to accelerate economic growth and the United States is doing the same thing," Abe told parliament on Wednesday.
"If Japan's economy improves, that's not a bad thing for the United States," he said, adding that he will explain this point when he meets Trump next week.
The dollar was on the defensive after Trump and his trade adviser, Peter Navarro, on Tuesday criticised China, Germany and Japan, saying they were devaluing their currencies to the disadvantage of the United States.
Senior Japanese officials, worried about the pain a rise in the yen could inflict on the export-reliant economy, scrambled to contain damage as the dollar hit a two-month low of 112.08 yen on Tuesday, following Trump's remarks.
The top government spokesman told reporters it was "absolutely not the case" that Japan was devaluing the yen to gain an unfair trade advantage.
"Japan is guiding policy in line with agreements made by the G7 and G20 countries. There will be no change to that stance," said Chief Cabinet Secretary Yoshihide Suga, one of Abe's closest aides and the point-person on economic policy.
Masatsugu Asakawa, Japan's top currency diplomat, told reporters that exchange-rates were determined by markets and were not being manipulated.
"As Bank of Japan Governor (Haruhiko) Kuroda has said repeatedly, Japan's monetary policy aims to achieve the domestic purpose of ending deflation. It's not aimed at currency rates," Asakawa, vice finance minister for international affairs, told reporters.
"If he is talking about currency intervention, Japan hasn't done any lately," he added, referring to Trump.
Kuroda later told parliament the central bank would continue to promote "powerful monetary easing" to achieve its 2 percent inflation target as quickly as possible.