The U.S. dollar on Tuesday hit the highest level since March 2017 in Asian trading, climbing to the lower 115 yen range, as expectations for an early interest hike by the U.S. Federal Reserve grew with Jerome Powell nominated for a second term as chairman of the central bank.

The dollar rose after fetching 114.82-92 yen in New York and 114.21-23 yen in Tokyo at 5 p.m. Monday. Tokyo markets were closed Tuesday for a national holiday.

A weaker yen enables exporters to earn more if they repatriate overseas profits and helps to sharpen the competitiveness of Japan-made products abroad, but it will likely lead to higher energy and food prices in the country, squeezing households.

If private consumption, accounting for more than half of Japan's gross domestic product, weakens, it is almost certain that the pace of economic recovery from the COVID-19 pandemic will slow down.

"The United States may normalize its monetary policy earlier than expected, with the dollar likely to remain within the 115 yen range until early next year," said Ryota Abe, an economist at Sumitomo Mitsui Banking Corp. in Singapore.

Crude oil prices have also risen due to increased energy demand along with a pickup in industrial activity, prompting the United States to announce Tuesday that it will release 50 million barrels of oil from emergency reserves in a coordinated action with countries such as Japan and China.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said that "although a weaker yen raises import costs for businesses, the negative effect on the Japanese economy will be limited at the current level."

"The rapid buying of the dollar is likely to be temporary and the yen is not expected to weaken any further," he added.