The depreciation of the yen to a critical level since November last year has fueled investors' fears that Japan will intervene in the currency market as it did last year.
This was reflected in the decline in the rising country's shares, which saw the Nikkei 225 average drop 1.4% even as the yen weakened for nine consecutive days to around 146.45.
Earlier last year, the Japanese authorities intervened when the ninja currency plunged to a price level of 145.90.
Although it may not immediately trigger action from the authorities, investors are now seen as more alert to any possibility.
Analysts say investors are now more cautious than getting caught up in the yen's sharp rise. However, the broader trend in the yen is seen as unchanged despite the intervention.
In addition to those factors, Japanese stocks are also facing pressure from the sluggish US stock market and China's worsening economic problems.
Meanwhile, the latest data showed Japan's exports fell in July for the first time in nearly two and a half years amid faltering demand for oil and chip-making equipment.
