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The BOJ conducted its first government bond buying operation on Monday since announcing monetary easing on a stunning scale, saying it will buy one trillion yen of Japanese government bonds of between five and ten years maturity, and 200 billion of bonds with maturities exceeding 10 years.
The dollar jumped a full yen in early Asian trading to hit 98.85 yen, the highest since June 2009, while the euro climbed as far as 128.42 yen, its highest since January 2010. The Aussie dollar soared to 102.34 yen, the highest since July 2008.
Traders saw the market taking the dollar through the 100-yen level as early as this week, and could aim for 102-103 yen in coming weeks. The dollar last hit 100 yen in April 2009. By late morning in Asia, however, the yen had steadied slightly from its early lows.
Any bearishness toward the dollar after Friday's weaker-than-expected U.S. nonfarm payrolls report was overwhelmed by speculators squarely focusing on the prospect of a sustained period of yen weakness as the BOJ set about implementing the world's most intense monetary stimulus.
The BOJ promised last Thursday to inject about $1.4 trillion into the economy in less than two years, in a radical gamble to beat Japan's deep-rooted deflation.
"The weak yen trend driven by expectations for aggressive BOJ easing remains firmly in place, and there now seems to be a strong conviction by market players that the yen will continue to weaken, with the 100 yen seen only as a transitional point," said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.
"Aside from something psychological, there isn't any reason to stop the dollar at 100 yen. The way the yen is sold despite the weak U.S. jobs data, there is really no reason to buy the yen right now," he said.
The dollar had weakened on Friday after the U.S. Labor Department reported that the U.S. economy produced just 88,000 new jobs last month - less than half the 200,000 expected in a Reuters poll, and below even the lowest estimate in the survey. The data added to fears the U.S. economic recovery may be losing steam after a recent soft patch of indicators.
But with that data out of the way Yunosuke Ikeda, senior currency economist at Nomura Securities, saw investors being more comfortable taking long-term positions that would see the dollar/yen rate climb over a sustained period.
"The BOJ's easing is squashing super-long Japanese government bond yields, which raises speculation that Japanese life insurers will shift some of their funds to unhedged foreign bond buying to some extent," Ikeda said.
Japan's Nikkei stock average jumped as much as 3.1 percent to its highest since August 2008 earlier, before shedding some gains.
The MSCI's broadest index of Asia-Pacific shares outside Japan percent to a four-month low, with Shanghai shares leading the decline with a 1.6 percent slide to a 3-1/2-month low.
China shares returned from a four-day holiday weekend with a weak tone as bird flu worries hit tourism-related sectors while the property sector lost ground on more sales curbs.
South Korean shares dipped to new four-month lows as increasingly strident rhetoric by North Korea and a slumping yen sent foreigners packing for a fourth day.
"Foreign selling is continuing amid the tensions with North Korean and concerns about the falling yen," said Park Seok-hyun, an analyst at KTB Securities.
The South Korean won fell to its weakest level in more than eight months of 1,139.4 against the dollar, weighed down by concerns that North Korea may conduct a nuclear test or a missile launch this week.
South Korea and the United States believe that North Korea could conduct a missile launch by Wednesday, after which the North said it could not guarantee the safety of resident diplomats.
The yen's weakness on the back of the BOJ's reflationary commitment bolstered Japanese gold futures up almost 5 percent to 5,025 yen per gram, just below its all-time high of 5,081 yen hit in early February.
Spot gold was down 0.2 percent to $1,578.84 an ounce, weighed by a 0.2 percent rise in the dollar <.DXY> against a basket of key currencies.
London copper rebounded, up 0.5 percent to $7,445 a tonne, after dropping for three consecutive weeks, although the bleak U.S. jobs report for March was likely to keep a lid on prices.
Brent crude oil was up 0.2 percent to $104.33 a barrel after touching an eight-month low on Friday on worries about weakening fuel demand in the world's largest oil consumer.
U.S. crude futures were up 0.1 percent to $92.77.
