The yen eased against major currencies on Wednesday after Japanese stocks touched a 10-week low on worries that record high oil prices would put the brakes on Japan's economic recovery.
The Nikkei average at one point fell below the 11,000 mark to its lowest level since late May, as NYMEX crude oil prices rose to a record high above $44 a barrel on concerns that major producers have no spare crude supply to cool prices.
"With Japan totally dependent on imported oil it's pretty clear the recent rise in oil prices isn't good for the economy," said Mitsuru Sahara, vice president of forex dealing at UFJ Bank.
"Considering oil prices and the dive in Japanese stocks today it's no surprise the yen is taking a bit of a hit."
The dollar was at around 111.10 yen around 0.6 percent above its level in late New York trade.
The euro was fetching around 133.70 yen compared to 133.35 in late New York trade.
The dollar also gained against the euro and was at $1.2030 versus $1.2060 in late New York trading.
The Nikkei closed down 1.17 percent at 11,010.02 yen.
Some traders were sceptical that the rise in oil prices was a clear negative factor for the yen, considering that a sustained rise in oil prices would also hurt the energy-hungry US economy and thereby the dollar.
"The US is the world's biggest oil importer so I think we can pretty much discount any one-sided explanations of higher oil prices lifting up the dollar-yen rate," said Ko Haruki, head of institutional forex sales at HSBC in Tokyo.
Traders said the market was quiet, with many reluctant to move ahead of US employment data for July, due on Friday, which could give further clues on the strength of the US economy and on the speed of any future interest rate rises.
"The market is transfixed by the payrolls data," said an analyst at a foreign bank. "So the chances of any big moves before then are pretty slim."
Economists expect an increase of around 228,000 new jobs in July, accelerating from a gain of 112,000 in June.