The yen briefly dropped past the 161 mark against the U.S. dollar to its lowest level in over 37 years on Friday morning despite Japanese authorities stepping up their warnings of possible intervention to stem the yen's decline.
The Japanese currency also fell past the 172 line against the euro, its lowest level since the European currency was introduced in 1999.
At noon, the dollar fetched 160.93-94 yen compared with 160.72-82 yen in New York and 160.54-56 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.0692-0696 and 172.07-14 yen against $1.0699-0709 and 172.03-13 yen in New York and $1.0689-0691 and 171.61-65 yen in Tokyo late Thursday afternoon.
The Japanese currency slipped against the dollar to its lowest level since December 1986, as expectations that the U.S.-Japan interest rate differential will persist more than offset fears that the Japanese authorities will step in.
Market players view recent solid U.S. economic data as indicating that the Federal Reserve will keep interest rates elevated for longer than expected.
Finance Minister Shunichi Suzuki on Friday ramped up his warnings that Japan will take "appropriate" steps against excessive volatility in the currency market, after the yen skidded past the 161 line.
The warning followed his comment on Thursday that the Japanese government would take "necessary" action if needed.
"While the tone of verbal interventions has recently become harsher, the effects on the exchange market have been short-lived," said Shinichiro Kadota, director of research at Barclays Securities Japan. "It's difficult to ascertain when they may step in again" as the yen already slipped beyond the previous intervention levels earlier this year.
Government data showed in late May that Japan spent 9.79 trillion yen ($61 billion) over the previous month to slow the yen's rapid fall against the U.S. dollar.
Japanese authorities are believed to have conducted a yen-buying operation in late April and early May when the dollar was trading at around 160 yen and 157 yen, respectively.
Stocks were higher in the morning, tracking overnight gains on Wall Street, while the yen's ongoing depreciation supported some exporters.
The 225-issue Nikkei Stock Average rose 386.37 points, or 0.98 percent, from Thursday to 39,727.91. The broader Topix index was up 22.81 points, or 0.82 percent, at 2,816.51.
