The yen has plunged against a basket of currencies after the Bank of Japan said the economy lies in a perilous state.
The yen fell 0.9% to 81.53 per dollar in early trading in New York after the central bank's governor Masaaki Shirakawa said the economy is in a "very severe" state, reports Bloomberg.
Its fall has led to speculation Japan may ease monetary policy further after the 11 March earthquake sent huge shockwaves through its economy.
The Japanese currency has slumped 4.1% this year - the biggest decline in the Bloomberg Correlation Weighted Indexes, added the newswire.
Japan has said damage from March's earthquake was worse than originally thought but believes it can end its nuclear crisis within months, reported the BBC.
Meanwhile as the yen plunged, sterling has risen after a shock increase in inflation to 4.5% in April raised the likelihood of the Bank of England hiking interest rates soon.
In afternoon trading the pound was up 0.1% against the dollar to $1.6208 and up 0.17% against the euro to €1.145.
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