The yen retreated from a four-month high on Monday after the Bank of Japan took extraordinary measures to support the economy in the wake of the calamitous earthquake and tsunami.
The central bank injected a record 15 trillion yen, or $184 billion, into financial markets to keep credit flowing in the economy and ramped up an asset-buying program by 5 trillion yen to 40 trillion yen.
Such support is meant to bolster stocks and prices, while the huge supply of yen helps lessen the currency's value.
The yen's climb against the dollar _ up about 14 percent in the past 12 months _ has pressured the profitability of Japan's exporters and weighed on the Japanese economy.
Japan's crisis has bolstered the yen even further because investors expect the Japanese public and insurance companies to buy back their home currency in order to fund the country's reconstruction, increasing demand for the yen.
The dollar was worth 81.65 Japanese yen late Monday, down from 81.88 yen late Friday. In overnight trading, the dollar had bottomed at 80.64 yen, its weakest level since early November, just above the post-World War II low of 79.75 yen struck in 1995.
The crisis is likely to keep up demand for the Japanese currency, many analysts say. After another huge earthquake in Japan, in 1995, the yen gained about 20 percent against the dollar in three months.
The country's financial officials will try not to let the dollar fall below 80 yen, said UBS currency analyst Chris Walker. The central bank and the government intervened last September to weaken the yen, but their efforts did not do much to curb the currency's rise.
In other trading Monday, the euro rose against the dollar after European officials on Saturday agreed to expand a bailout fund and take other measures to tackle the region's debt crisis. Borrowing costs for the euro bloc's most indebted countries fell, while European stocks rose.
The euro gained to $1.3995 from $1.3890, while the British pound rose to $1.6174 from $1.6071. The U.S. currency slid to 0.9242 Swiss franc from 0.9298 Swiss franc, but edged up to 97.45 Canadian cents from 97.29 Canadian cents.