The yen briefly fell to a 34-year low near the 152 line against the U.S. dollar in Tokyo on Wednesday, as the yen was sold on expectations the Bank of Japan will maintain its accommodative stance despite raising interest rates.
The yen hit around 151.97 per dollar after BOJ board member Naoki Tamura said short-term interest rates would remain near zero for the time being, even though the central bank took a step toward normalizing policy by ending negative interest rates last week.
Investors have been selling the yen for the dollar amid a wide interest rate differential between Japan and the United States, as their central banks have been pursuing divergent ultraloose and tight monetary policies, respectively.
At noon, the U.S. dollar fetched 151.88-91 yen compared with 151.50-60 yen in New York and 151.32-34 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0824-0828 and 164.39-49 yen against $1.0825-0835 and 164.10-20 yen in New York, and $1.0841-0843 and 164.05-09 yen in Tokyo late Tuesday afternoon.
Stocks climbed as the yen's depreciation lifted exporters, which benefit from a weaker yen when repatriating profits from overseas.
The 225-issue Nikkei Stock Average rose 406.82 points, or 1.01 percent, from Tuesday to 40,804.85. The broader Topix index was up 24.65 points, or 0.89 percent, at 2,805.45.
Investors also took the opportunity to scoop up a wide range of shares following a dip earlier this week, with the market further supported by buying to secure dividends ahead of the end of the fiscal year, analysts said.
"Japanese stocks have reached this level due to prevailing bullish sentiment," with active buying among individual investors helping to limit any declines, said Chihiro Ota, assistant general manager of investment research at SMBC Nikko Securities Inc.
