The yen hit a 22-month low of 123.35-38 to the dollar late Monday as deepening pessimism about Tokyo stocks and Japan's banking system dominated the currency market.
The Bank of Japan's move to inject more liquidity into the faltering economy could keep weighing on the yen, taking it to 130 to the dollar in a month or two.
With industry in no mood to increase capital investment, gross domestic product is now expected to fall short of the year-earlier level for the second-consecutive quarter in the April-May period.