Tokyo stocks have rallied to their highest levels in more than four years on an accelerated slide in both the yen and government bond yields triggered by the Bank of Japan’s aggressive monetary easing measures to prop up the economy.

Market players are now shifting their attention from the currency and debt markets to see whether the government can match its words with actions to achieve tangible economic growth and dispel concerns about an asset-price bubble.

By early April, the dollar, which traded at ¥93 a month ago, had risen to as high as the upper ¥99 range, while the yield on the 10-year Japanese government bond carrying a 0.6 percent coupon had fallen to around 0.5 percent after briefly diving to 0.315 percent, the lowest on record. These developments came after the credit-easing steps decided by the bank on April 4 took the market by surprise.

At last week’s policy meeting, the first under the leadership of Gov. Haruhiko Kuroda, the BOJ decided to double the monetary base in two years and step up purchases of longer-dated government bonds among other riskier financial assets.

The Nikkei 225 stock average surged the following day above the 13,000-point mark, its highest level in about four years and eight months, generating a record trading volume of 6.45 billion shares.

“The BOJ came up with everything it could, drawing a positive surprise” with the larger than expected amount of asset-buying, said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.

He said the BOJ decision means Prime Minister Shinzo Abe’s administration has in effect delivered on one of its economic and financial policies.

Consequent drops in government bond yields lifted shares of companies sensitive to changes in domestic demand, particularly beneficiaries of interest rate falls such as real estate developers and financial firms.

The currency moves further fueled expectations for better performances by exporters as the dollar climbed well above the lower ¥85 range, the average exchange rate assumed for fiscal 2013 by large manufacturers, according to the BOJ’s recent “tankan” business sentiment survey.

“Investors are becoming very bullish as they realized they may incur a loss for leaving their funds asleep after the 10-year bond yield slid to a record low,” said Hiroichi Nishi, assistant general manager of equity research at SMBC Nikko Securities Inc.

Behind the continued optimism for Japanese stocks is the expectation that key asset classes will keep moving to the benefit of many companies with the BOJ’s aggressive asset-buying in place.

Declining Japanese bond yields are seen as widening gaps between U.S. and Japanese interest rates and pushing the yen lower against the dollar, analysts said.

So far, the dollar has climbed about ¥20, or 20 percent, and the Nikkei has jumped more than 4,500 points, or 50 percent, since mid-November, when lawmakers decided to hold a general election in December, raising expectations that Abe’s Liberal Democratic Party would return to power.

Many market analysts say the Nikkei may test 14,000 or even 15,000 and the dollar may advance to ¥105 or higher, both in about three months.

While many brokers hailed the BOJ’s moves to flood the financial market with cash, some also expressed caution that its aggressive easing might eventually lead to an asset bubble and be taken as fiscal financing, causing a surge in long-term bond yields.

Others question how effective monetary easing really will be in lifting the economy. U.S. credit-rating agency Moody’s Investors Service, for example, said in a report Monday that credit-easing will only buy time until the government implements structural reforms, which the Abe administration plans to outline around June.

To keep the favorable financial market trend intact, “it is necessary that the easing measures will eventually lead to tangible economic revival and that businesses will be more optimistic about capital investment and hiking wages,” said Tsutomu Yamada, a market analyst at kabu.com Securities Co.

Announcements of corporate earnings results for fiscal 2012 and projections for the current year, starting later this month, will give investors the first glimpse at what to expect under Abe’s policies, dubbed “Abenomics,” before growth strategies to be mapped out by the government around June provide further clues.

“Mr. Abe will now be put to a real test,” SMBC Nikko’s Nishi said.

Investors will look to see whether Abe can tackle vested interests and relax regulations through his growth strategy, including successful entry into the Trans-Pacific Partnership free-trade talks, said Nishi.

Despite the benefits of the yen’s slide for exporters, concerns are growing stronger that excessive currency depreciation might generate adverse effects.

“If the dollar gains well above ¥100, it might pose a negative impact” by further inflating import costs and prices of imported natural resources, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

Sakai said overseas developments could change the market tide. For instance, the financial woes in Cyprus as well as the political deadlock in Italy might reignite concerns over the eurozone debt crisis, he said.

Other international factors include wariness about a possible economic slowdown in China if the government’s measures to cool the real estate market go too far, brokers said.

Even though expectations remain strong about a U.S. economic recovery, bullish sentiment slightly waned following the release Friday of nonfarm payrolls jobs data for March that showed a significantly smaller than expected addition of 88,000 jobs.

“If hopes for the U.S. economy become solid, underpinned by more upbeat macroeconomic data, the dollar is likely to attract buying against the yen, and buoy the Tokyo bourse,” IwaiCosmo’s Horiuchi said.