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Yen hits record-high as stock market continues its downfall

The Japanese currency reached its highest level against the US dollar since the Second World War.

The Japanese yen hit its highest rate against the US dollar since the end of World War Two. The exchange rate reached 76.25 yen against the dollar during American trade times, though it dropped back to to 79.14 by then end of the afternoon in Asia.

A stronger yen is thought to be a threat to the Japanese economy as it could strongly hinder its exporters' competitiveness.

Analysts have so far blamed this shift on the repatriation of assets in foreign currency by Japanese insurance companies. Japan's Finance minister, Yoshihiko Noda, said it was the result of "speculation" and of "nervous" market moves.

The G7 -- a group of the worlds richest nations including Japan, the US, the UK and China -- will meet by Friday morning to discuss the issue. G7 finance ministers could give Tokyo the green light to intervene in currency markets. However, Japan's Economy minister, Kaoru Yosano, discarded that possibility, adding he expected "psychological support" from the G7.

Meanwhile, the Nikkei 225 index lost another 1.4 per cent, amidst fears that a stronger currency would harm exports. The Japanese index has lost 14% of its total points since the earthquake last Friday.

The Bank of Japan injected another 6 trillion yen (£39bn) into the banking system. This is the bank's fourth consecutive intervention, with a total of 34 trillion yen pumped into the financial markets.

Analysts think it may have to intervene in the near future to stop the strengthening of the national currency by selling yens to buy foreign currencies.