Japan government and central bank intervene to cut yen
The Japanese government and central bank have intervened to weaken the yen to protect economic growth.
Japan sold yen on the markets, weakening the currency so that the dollar was worth more than 79 yen, up from about 77 yen before the move.
The Bank of Japan (BOJ) announced further monetary easing in the afternoon.
These were unilateral moves by Japan, unlike an intervention in March, which was backed by the G7 group of nations.
Analysts questioned whether the intervention would have any long-term impact.
The BOJ said it would make more money available to financial markets by expanding a programme to buy government bonds and other securities.
The central bank will increase the money associated with that programme from 40tn yen ($504bn; £308bn) to 50tn yen.
It said it would achieve this by the end of 2012.
"The Bank deemed it necessary to further enhance monetary easing, thereby ensuring a successful transition from the recovery phase following the earthquake disaster to a sustainable growth path with price stability," the BOJ said in a statement
The central bank also decided to keep its benchmark policy rate at a range of zero to 0.1%.
The government has repeatedly warned that the strong yen threatens growth and recovery from a deadly earthquake and tsunami.
Since the last intervention, the yen had gained about 5% against the US dollar, and over the past 12 months it has risen by almost 12%.
"Intervention doesn't generally have a long-term impact on the value of the yen," said Naomi Fink of Jefferies.
"Its aim is to send a warning to speculators and to prevent markets from becoming disorderly."
The dollar was recently trading at close to 78.47 against the yen, up from 77.
Finance Minister Yoshihiko Noda confirmed the move to the media but declined to comment on the size of the intervention.
Japan's Chief Cabinet Secretary Yukio Edano said the government was stepping in at the right moment.
"Recent currency moves were one sided and could have hurt the economy, and considering this, the intervention was timely," Mr Edano told reporters.
The BBC's Tokyo correspondent Roland Buerk says the government has complained that the rise of the yen has not been based on economic fundamentals.
Japan's economic growth has been stagnating and has been put under increased pressure by the cost of rebuilding following the deadly earthquake and tsunami in March.
But despite these problems, the yen has been boosted in recent months as many investors have moved away from the US dollar and the euro amid fears of an expanding debt crisis.
Other currencies, such as the Swiss franc, which are seen as being less risky have also gained.
In a surprise move on Wednesday, the Swiss central bank cut interest rates in an attempt to weaken the franc.
Analysts questioned how much governments such as Japan or central banks such as Switzerland's can do on their own to weaken currencies.
"The yen's advance reflects the difficult economic and fiscal situation of both the US and the eurozone," said Takashi Kamiya from T&D Asset Management.
"So even if Japan intervenes in the market, it won't be able to combat the yen's rise in the long run on its own."