Japan's leading shares have risen by almost 3% after authorities intervened in the currency markets to weaken the value of the yen against the dollar.
The central bank stepped in to sell yen and buy dollars, a day after the yen hit a 15-year high against the dollar.
It is the first time in six years that the Bank of Japan has intervened, and further action has not been ruled out.
A strong yen makes Japanese exports more expensive, and reduces profits when earnings are repatriated.
In early trading on Wednesday, the dollar rose to 85 yen, after hitting 83.09 yen on Tuesday.
Investors welcomed the currency move, sending Japan's Nikkei share index up by 256.50 points, or 2.9%, to 9,555.53.
The yen had spiked after news filtered through that Prime Minister Naoto Kan had survived a leadership challenge from rival Ichiro Ozawa.
Traders had reckoned Mr Kan would be less likely than Mr Ozawa to take measures to weaken the yen.
Economic harm
But in a brief news conference, Finance Minister Yoshihiko Noda said: "We have conducted an intervention in order to suppress excessive fluctuations in the currency market.
"We will closely monitor currency developments, and take firm action including intervention.
"Our country's economy is still in a very severe situation with continued deflation," he added.
The yen's rapid appreciation "harms the stability of the economy and finances. We cannot tolerate it."
The record low for the dollar is 79.75 yen, reached in April 1995.
Mr Noda did not reveal the size of the intervention, although the Dow Jones news agency reported that Japan's Ministry of Finance had initially sold between 200bn and 300bn yen ($2.4bn-$3.6bn; £1.5bn-£2.3bn).
A recent government survey suggested many companies were considering moving production overseas if the yen stayed high.
