The US dollar hit a 20-month high against the Japanese yen into the upper 84-yen range on Tuesday on lingering expectations that incoming prime minister Shinzo Abe will intensify pressure on the central bank to further ease monetary policy.
At 4:40 p.m. (0740 GMT), the dollar traded at JPY 84.81-84.86 against JPY 84.89-99 in New York at 5 p.m. Monday. Japan's financial markets were closed Monday for a national holiday. The greenback climbed to JPY 84.96 at one point in the morning, its highest level since April 11 last year.
Liberal Democratic Party (LDP) President Abe, who is set to become the nation's next leader on Wednesday following the LDP's landslide victory in the December 16 general election, is known as his aggressive stance on monetary and fiscal policy.
On Sunday, Abe warned that he will consider revising the law governing Bank of Japan if the central bank refuses to introduce a 2 percent inflation target, double its current price stability goal, at its next policy board meeting in January.
Reflecting the weaker yen, buy orders overwhelmed Tokyo stocks, sending the benchmark 225-issue Nikkei Stock Average to gain 140.06 points, or 1.41 percent, from Friday to 10,080.12.