The yen had skidded to its lowest level in over a year and a half on Monday after Japan's conservative Liberal Democratic Party (LDP), which is committed to aggressive monetary easing, won a landslide election victory.

While the yen could find some support in the near term if position squaring sets in, traders and analysts said the yen's downtrend was likely to remain in place.

"There is a good chance that the yen weakness may persist, especially heading into the end of the first quarter (of 2013)," said Sim Moh Siong, FX strategist for Bank of Singapore.

A focal point will be a forthcoming change in BOJ leadership and the implications for monetary policy, he said.

"It's more of an expectation that the BOJ's conservative character could change," he added.

Japan's next prime minister Shinzo Abe wants someone more in tune with his expansionary thinking to replace BOJ governor Masaaki Shirakawa when his term expires in April. In addition, two deputy governor posts are opening up in March.

Abe is set to form his cabinet on Dec. 26.

The dollar edged up 0.2 percent to 84.07 yen, nearing a high of about 84.50 yen that had been hit on Monday, the greenback's strongest level against the yen since April 2011.

The dollar retreated on Monday after hitting that 20-month peak against the yen, but the pull-back was relatively shallow.

"The corrective fall in the dollar/yen after the election was small and it's crawling up because the yen weakening trend is still intact," said Yuji Saito, director of the foreign exchange department in Tokyo at Credit Agricole Corporate & Investment Bank.

The yen had slid on Monday after the LDP surged back to power in an election on Sunday. The LDP and its ally, the New Komeito party, secured the two thirds majority needed to overrule parliament's upper house, meaning the new government has a greater chance of pushing though its policies.

Center>Copyright Reuters, 2012