TOKYO: The yen drifted lower in Asia on Thursday, hitting multi-year lows against the dollar and euro as investors bet on further Bank of Japan monetary easing measures.
The dollar rose to 118.15 yen in midday Tokyo trade, from 118.01 yen in New York and hovering around its highest level since August 2007.
The euro bought 148.24 yen against 148.11 yen in US trade, the highest level since October 2008.
The common European currency slipped to $1.2536 against $1.2551 in New York.
Wrapping up a two-day policy meeting on Wednesday, the Bank of Japan (BoJ) kept its upbeat view that the economy was recovering, despite data this week showing the country had slipped into recession.
But the central bank trimmed its inflation expectations, saying that they "appear to be rising on the whole from a somewhat longer-term perspective".
Many economists believe the BoJ will need to launch further easing measures on top of a surprise asset-purchase plan expansion last month that triggered a fresh round of yen selling.
"The BoJ may be prepared to become even more aggressive to achieve its inflation target," Credit Agricole said in a note.
Policymakers have set a goal of reaching 2.0 percent inflation as part of Tokyo's wider bid to conquer years of falling prices and turn around the deflation-plagued economy.
In the US, minutes from the Federal Reserve's October 28-29 meeting showed policymakers were confident enough in the economy to bring an end to its vast bond-buying stimulus programme, a plus for the dollar.
However, they also made clear there was little thought of departing from its current policy of keeping interest rates at the current zero level well into 2015. Most analysts forecast initial hikes around the middle of next year.
"Hedge funds appear to be gearing up for more yen-shorting, which could take the dollar to at least the 120 yen mark in a short time," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
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