The yen briefly fell to the 137 line against the U.S. dollar on Wednesday in New York, hitting a new 24-year low amid persistent market expectations for a divergence between Japanese and U.S. monetary policies.

The Japanese currency dropped to 137.00 against the dollar in morning trading, a level not seen since September 1998. The Bank of Japan left its ultraeasy monetary policy unchanged earlier in the month, in stark contrast with the Federal Reserve's continued credit-tightening stance to curb soaring inflation.

The ongoing expectation of widening interest rate gaps between the two economies has encouraged traders to sell the yen for the dollar.

During a symposium hosted by the European Central Bank earlier in the day, Fed chief Jerome Powell reiterated his position of aggressively tackling inflation, saying monetary tightening could slow economic growth but it is not a major risk.

His latest remarks fueled speculation that the Fed is likely to continue tightening its monetary grip, causing the Japanese currency to weaken further against the dollar.