TOKYO, April 20 (Xinhua) -- The Japanese yen dropped to a new 20-year low in the 129 zone against the U.S. dollar on Wednesday, amid concerns over further divergence in monetary policies and the interest rates between Japan and the United States.
The yen tumbled to around 129.40 against the dollar in morning trading on a rise in the yield on the benchmark 10-year U.S. Treasury note, logging the yen's weakest level against the dollar since April 2002.
However, the Japanese currency bounced back to the upper 128 zone with market participants locking in profits.
The Japanese yen has been tumbling rapidly in recent weeks. It reached the 120 level on March 22 for the first time in six years.
The Bank of Japan (BOJ), maintaining its powerful monetary easing, announced Wednesday that it will purchase unlimited amounts of 10-year Japanese government bonds to stem a rise in long-term interest rates.
The bond-buying decision, which the BOJ also made in March, came after the 10-year Japanese government bond yield increased to 0.25 percent during after-hours trading on Tuesday, around the central bank's implicit upper limit.
The central bank said it accepted bids to buy 225.1 billion yen (1.7 billion dollars) in the bond-buying offer.
On the yen's return to the 128 level in the afternoon, Takuya Kanda, senior researcher at the Gaitame.com Research Institute, said that market players locked in profits on the dollar's surge, before planned talks between Japan's Finance Minister Shunichi Suzuki and U.S. Treasury Secretary Janet Yellen in Washington this week.
On the stock market, the 225-issue Nikkei Stock Average closed up 232.76 points, or 0.86 percent, from Tuesday at 27,217.85.
The broader Topix index ended 19.45 points, or 1.03 percent, higher at 1,915.15.
On the top-tier Prime Market, gainers were led by transportation equipment, pulp and paper, and farm and fishery issues.
The benchmark Nikkei index tracked overnight gains on Wall Street and gained ground for the second consecutive day on booming export-oriented shares including automakers, which were supported by the yen's weakening against the U.S. dollar.
Subaru rose 5.4 percent, while Nissan Motor gained 4.7 percent, and Mitsubishi Motors increased 4.7 percent.
High-tech issues also gained ground following a rise in their U.S. counterparts and an overnight drop in the West Texas Intermediate crude oil futures for May.
Looking ahead, brokers are focused on corporate earnings to be released by many companies between later this month and May, according to market participants.
Among Prime Market issues, advancing issues outnumbered declining ones 1,267 to 521, while 51 finished the day unchanged.
Trading volume on the Prime Market increased to 1,146.54 million shares compared to Tuesday's 961.96 million. ■