The U.S. dollar climbed past 150 yen Tuesday in Tokyo on yen selling fueled by expectations that the Bank of Japan will likely maintain an accommodative stance despite ending its negative interest rate policy.
Stocks erased earlier losses and ended higher, with the Nikkei benchmark finishing at a two-week high above the 40,000 threshold, as a weaker yen boosted export-related issues.
The dollar climbed by around 1 yen after the BOJ's widely expected decision, which marks a major shift from the central bank's powerful monetary easing policy that had been in place for years, while it noted accommodative conditions are expected to remain.
The outcome was within market expectations, with the yen weakening as the BOJ expressed its intention to maintain an accommodative policy, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
Investors will now be "focused on the BOJ's timeline for further rate hikes," he added.
At 3 p.m., the dollar fetched 150.30-31 yen compared with 149.09-19 yen in New York and 149.12-14 yen in Tokyo at 5 p.m. Monday.
The euro was quoted at $1.0863-0867 and 163.27-34 yen against $1.0867-0877 and 162.08-18 yen in New York and $1.0892-0893 and 162.43-47 yen in Tokyo late Monday afternoon.
Bonds drew buying after the BOJ said it would continue purchasing government bonds by "broadly the same amount as before." The yield on the benchmark 10-year Japanese government bond briefly fell 0.030 percentage point from Monday's close to 0.725 percent.
The 225-issue Nikkei Stock Average ended up 263.16 points, or 0.66 percent, from Monday at 40,003.60. The broader Topix index finished 28.98 points, or 1.06 percent, higher at 2,750.97.
The Nikkei index was initially lower as investors locked in gains after the benchmark surged over 1,000 points the previous day. But it trimmed losses in the afternoon, with exporters pulling the Nikkei up into positive territory as the yen continued to depreciate.
On the top-tier Prime Market, gainers were led by real estate, mining and transportation equipment issues.
In its first rate increase in 17 years, the BOJ decided to guide short-term interest rates within a range of zero and 0.1 percent, judging that its goal of attaining stable 2 percent inflation is "in sight."
The bank also decided to scrap its yield cap program, under which long-term interest rates have been at extremely low levels, and end its purchases of assets such as exchange-traded funds.
