Shares in some of Japan's biggest companies slumped on Wednesday as the yen climbed to its strongest level against the US dollar for three years.
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The big names under pressure from the dollar's seemingly relentless slide - which pushes up the prices of Japanese goods sold overseas - include car giants Honda and Nissan, both down about 6%.
Iconic electronics names such as Canon and Nikon also suffered as the benchmark Nikkei 225 index slid 2.57% by the close of trading to 10,542.20 points.
The selling, which Japanese officials blamed on "speculation", was triggered as the yen strengthened above 110 to the dollar, reaching levels last seen in November 2000.
By 0500 GMT on Wednesday, the yen was selling at 109.54 to the dollar, up from 109.95 yen in New York late on Tuesday.
As trading shifted from Tokyo to London later in the day the gains moderated, and by 1300 GMT the US dollar was buying 109.7 yen.
The dollar had briefly jumped on Tuesday as Japanese banks stepped in to try to prop up the currency, but to no avail.
The sharp movement was immediately picked up by Japan's government, who vowed to do what it could to stem the rise.
"The yen's recent gains have been too sharp. It's bad for the economy,» Chief Cabinet Secretary Yasuo Fukuda told a news conference.
"We will respond to excessive moves. We will take decisive steps."
What those steps might be, however, remain unclear.
"A level of 110 was considered a major line in the sand, and there is still no major intervention in sight," said Nagayuki Yamagishi, senior strategist at UFJ Tsubasa Securities in Tokyo.
"Investors are becoming increasingly worried about the strength of the yen."
At the same time, machinery orders in Japan, often seen as a barometer of future investment, slid at a faster than expected rate of 4.3% in August over the previous year.
The shock of breaching the 110-yen boundary may trigger a slight fallback, but for the moment the trend towards a weaker dollar looks set to stay, traders say.
Investors continue to bet on US determination to keep the dollar weak so as to bolster the economy at home.
Widespread US job losses are being blamed by politicians on foreign competition, particularly from Asia, and the White House is keen to appear to be doing something about it.
The most recent meeting of the G-7 industrialised nations - including Japan and the US - backed a "more flexible" exchange rate situation, implying backing for a slide in the dollar.