The yen briefly fell to a fresh 20-year low in the 134 range against the U.S. dollar on Wednesday, reflecting prospects of a divergence in monetary policy between Japan and the United States.
The yen tumbled to 133.63 at one point in Tokyo trading Wednesday, according to the Bank of Japan, and further slipped into the 134 zone in London, marking its lowest level against the U.S. currency since February 2002.
At 5 p.m. in Tokyo, the dollar fetched 133.57-59 yen compared with 132.59-69 yen in New York and 132.76-78 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0688-0690 and 142.76-80 yen against $1.0699-0709 and 141.96-142.06 yen in New York and $1.0687-0688 and 141.88-92 yen in Tokyo late Tuesday afternoon.
Tokyo stocks extended their winning streak to four days, supported by the yen's depreciation. The 225-issue Nikkei Stock Average ended up 290.34 points, or 1.04 percent, from Tuesday at 28,234.29, its highest level since March 29. The broader Topix index finished 22.95 points, or 1.18 percent, higher at 1,969.98.
On the top-tier Prime Market, gainers were led by mining, real estate and wholesale issues.
The dollar has been sought in recent months on the back of contrasting policy approaches by the Bank of Japan and the U.S. Federal Reserve, which decided in March to raise key interest rates for the first time since 2018 in an effort to curb inflation.
In contrast, BOJ Governor Haruhiko Kuroda reiterated the previous day that the central bank will stick to its powerful monetary easing to realize its 2 percent inflation goal in a sustainable way.
The yen's tumble is unlikely to stop unless the BOJ takes the unrealistic decision of shifting its monetary policy, although its resolve may waver in the face of public criticism, analysts said.
The Japanese currency's fall accelerated throughout the day after U.S. Treasury yields rose during after-hours trading, while the solid gains made by Tokyo stocks also increased risk appetite and prompted investors to buy the dollar.
Stocks moved little within positive territory throughout the day, supported by the yen's depreciation.
"The markets were overall supported by the yen's fall, which lifted some automakers and manufacturers," said Koichi Fujishiro, a senior economist at the Dai-ichi Life Research Institute.
But investors refrained from chasing the upside as they waited for the release of the U.S. consumer price data for May, due out later in the week, as they gauge the rate of inflation and respective stance from the Fed, Fujishiro said.
The market was additionally buoyed by hopes for a recovery in Japan's economy as the country prepares to open its doors to inbound visitors starting Friday, analysts said.
Among Prime Market issues, advancing issues outnumbered decliners 1,413 to 356, while 69 ended unchanged.
In the auto sector, Toyota Motor rose 39.5 yen, or 1.8 percent, to 2,230.0 yen and Nissan gained 6.4 yen, or 1.2 percent, to 561.0 yen.
Energy-related issues were bought after crude oil futures hit a three-month high in New York trading overnight as China's easing of COVID-19 restrictions is expected to increase energy demand.
Oil explorer Inpex finished up 79 yen, or 4.7 percent, at 1,750 yen, Japan Petroleum Exploration gained 190 yen, or 5.7 percent, to 3,510 yen and refiner Idemitsu Kosan climbed 80 yen, or 2.1 percent, to 3,945 yen.
Trading volume on the Prime Market rose to 1,300.38 million shares from Tuesday's 1,174.58 million.
The yield on the benchmark 10-year Japanese government bond ended at 0.245 percent after finishing the regular trading untraded for two straight sessions.