The yen tumbled to the lower 144 range and hit a new 24-year low of 144.38 against the U.S. dollar on Wednesday in Tokyo, as the currency market responded to speculation that the Federal Reserve will not halt its interest rate hikes any time soon following upbeat U.S. economic data.

After topping the 143 line in New York overnight, the dollar continued to be bought in Tokyo as stronger-than-expected U.S. nonmanufacturing data from the Institute for Supply Management increased the likelihood that the Fed will continue with aggressive interest rate hikes, dealers said.

Further hikes would lead to widening U.S.-Japan interest rate differentials as the Bank of Japan sticks with its ultraloose monetary policy.

A financial data screen in Tokyo shows the U.S. dollar hitting the 144 yen level on Sept. 7, 2022. (Kyodo)

The yen continued to fall despite Japanese government officials signaling the country may intervene if the yen continues its rapid depreciation.

Tomoichiro Kubota, senior market analyst at Matsui Securities Co., said the market ignored the government's warning, saying it was "just talk" and "lacked details."

Kubota added that the market could "test the 147 level the Japanese currency hit in 1998."

The momentum of dollar-buying against other currencies may continue with the European Central Bank likely to increase interest rates on Thursday to tame rising inflation in the region, a move which would further weigh on the Eurozone's economy, dealers said.

"As investors remain deeply concerned about stagflation in Europe...they will continue to sell the euro against the dollar after (a possible) 0.75 percentage point rate hike by the ECB," pushing the dollar higher, said Yukio Ishizuki, a senior foreign exchange strategist at Daiwa Securities Co.

At 5 p.m., the dollar fetched 143.89-91 yen compared with 142.74-84 yen in New York and 141.53-55 yen in Tokyo at 5 p.m. Tuesday.The euro was quoted at $0.9923-9925 and 142.79-83 yen against $0.9902-9912 and 141.33-43 yen in New York and $0.9975-9976 and 141.18-22 yen in Tokyo late Tuesday afternoon.

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The euro was quoted at $0.9923-9925 and 142.79-83 yen against $0.9902-9912 and 141.33-43 yen in New York and $0.9975-9976 and 141.18-22 yen in Tokyo late Tuesday afternoon.

The yield on the bellwether 10-year Japanese government bond rose 0.010 percentage point from Tuesday's close to end at a seven-week high at 0.245 percent, tracking a rise in long-term U.S. Treasury yields.

Tokyo stocks ended down, with the Nikkei index ending at over one-and-a-half month low, on increased concerns over a slowdown in the U.S. and European economies as a result of monetary tightening by their respective central banks.

The 225-issue Nikkei Stock Average ended down 196.21 points, or 0.71 percent, from Tuesday at 27,430.30, its lowest since July 19. The broader Topix index finished 10.93 points, or 0.57 percent, lower at 1,915.65.

On the top-tier Prime Market, decliners were led by mining, marine transportation, and electric appliance issues.

Japanese shares drew selling following overnight falls in U.S. shares amid worries about the outlook for the world's largest economy as higher interest rates make borrowing costs more expensive and slow economic activities.

Technology shares were sold, inheriting a downward trend from the tech-heavy Nasdaq index.

Semiconductor equipment maker Tokyo Electron lost 1,150 yen, or 2.7 percent, to 41,550 yen, while Advantest shed 150 yen, or 1.9 percent, to 7,570 yen. Chipmaker Screen Holdings was down 200 yen, or 2.2 percent, at 8,990 yen.

Among Prime Market issues, declining issues outnumbered advancers 1,369 to 432, while 36 ended unchanged.

Trading volume on the Prime Market rose to 1,115.04 million shares from Tuesday's 850.21 million.