The yen on Thursday powered to a 21-month high against the dollar after the Bank of Japan held fire on fresh stimulus, as fears over Britain's future in the EU pummel financial markets.
Japan's currency hit 104.53 against the dollar, its strongest level since September 2014, as the central bank's policy board voted to keep its 80 trillion yen asset-buying plan unchanged.
The euro also tumbled, hitting a more than three-year low of 117.84 yen, against 119.17 in Tokyo before the BoJ decision.
The yen's surge took a bite out of Tokyo's benchmark Nikkei stock index which was down two percent in afternoon trading.
The BoJ's decision comes after the Federal Reserve on Wednesday decided against raising interest rates and its boss Janet Yellen sounded a warning over a possible British exit -- or Brexit -- from the EU.
Her comments had sent the dollar tumbling against the yen in US trade, with the losses picking up after the Japanese central bank ended its policy meeting.
Another round of easing from the BoJ would tend to weaken the yen, which has been gaining favour as investors seek out assets seen as safe bets.
"The yen is being bought because some traders had expected more easing (from the BoJ) but the bank didn't make a move," said Marito Ueda, a senior dealer of FX Prime in Tokyo.
"Because of concerns over Brexit, the yen had already been bought more than the dollar," he added.
World markets have been in turmoil over the past week on worries about the global economic outlook and, in recent days, a growing sense that the June 23 referendum will see Britons vote to break away from the European Union.
A vote to leave the 28-member economic bloc could have significant consequences for more than 1,000 Japanese firms that operate in Britain -- many see it as a staging point for doing deals in Europe.
- 'Sense of urgency' -
Earlier Thursday, Tokyo repeated warnings it could intervene in currency markets to tame the resurgent yen.
"We have seen drastic and speculative movements" in currency markets, top government spokesman Yoshihide Suga told a regular news briefing before the BoJ decision.
"So we'll keep monitoring (the market) with a sense of urgency... If necessary, we'll take a firm response," he added.
The warning was the latest from Japanese officials over the yen's rise, which is threatening profits at Japan Inc and dealing a blow to Prime Minister Shinzo Abe's growth blitz, dubbed Abenomics.
However, an intervention to weaken the yen could put Japan on a collision course with its G20 counterparts, who have agreed to hold off such moves.
Japan's central bank pointed to the struggling economy on Thursday, but analysts said policymakers likely wanted to wait until after the British EU vote next Thursday before making any fresh moves.
Inflation remains weak and "exports and production have been sluggish due mainly to the effects of a slowdown in emerging economies," the BoJ said.
Japan's economy grew 0.5 percent in the first quarter -- or 1.9 percent at an annualised rate -- dodging a recession.
But there are widespread concerns about the strength of its recovery.
The stronger yen also makes imported goods less expensive, knocking prices as the bank struggles to hit two percent inflation target.
"We believe that policymakers will respond to the recent moderation in underlying inflation by stepping up the pace of easing next month," said Marcel Thieliant from research house Capital Economics.