G7 finance ministers and central bankers have expressed concern at the “excessive volatility” in the exchange rate of Japan’s currency, the yen.
Asian shares fell as the markets opened. Japan’s Nikkei index closed at a 26-year low of 6.36 per cent.
Investors feared fresh moves expected from central banks this week will not be enough to stave off a deep global recession.
A strong yen and tumbling bank shares weighed on the market amid continuing worry about the global economy.
Japan’s Prime Minister Taro Aso is reported to have told an aide he will not call an election for the time being because of market turmoil.
“A strong yen isn’t all bad for Japan,” he said. “We’ve got to think of the positive too.”
South Korean policymakers took their most dramatic measures yet in a month long battle to buttress confidence in an economy facing its sternest test since the Asian financial crisis a decade ago.
The Bank of Korea cut its main interest rate by 75 basis points to 4.25 per cent, the biggest rate cut on record.
The Australian dollar traded close to record lows against the yen and near five and a half year lows against the US dollar.