The yen continued its slide against the dollar on Monday after global finance ministers at the weekend avoided directly criticizing Japan for pursuing policies that have led to significant weakness in its currency. However, analysts warned against expecting a further drop in the yen.
The Group of 20 nations (G-20) meeting in Moscow gave a green light to markets to keep selling the yen, which has lost about 16 percent of its value against the dollar in the past three months, but currency strategists told CNBC that more downside for the yen was unlikely.
Now that Japan's new government has made its point about the need to reflate Japan's economy and end two decades of deflation, Tokyo is likely to tone down the talk of aggressive monetary easing that has weakened the yen, said Frank Lavin, CEO of Export Now, a company that helps companies break into Chinese markets.
"Privately, they (Japanese officials) probably got a lot of push back in Moscow," Lavin told CNBC Asia's "Squawk Box" on Monday. "I think what we'll see now is that Japan does ease off on the rhetoric, (Prime Minister Shinzo) Abe has made his point domestically. We've seen him ride this pony as far as it will go."
Abe said on Monday that while the Bank of Japan has promised an ultra-easy monetary policy until inflation reaches 2 percent, the central bank is also mandated to prevent prices from rising above that target.
(Read More: Did the G-20 Just Signal Further Global Easing?)
Abe came to power following elections in December and has made a concerted push to revive Japan's frail economy, urging the Bank of Japan to adopt a 2 percent inflation target, something the central bank did last month, and pursue aggressive monetary easing to end deflation.
It's the expectations of aggressive central bank action that have knocked the yen lower, giving Japan's exporters an edge in overseas markets and sparking cries of foul play from Japan's competitors.
The yen weakened on Monday to about 94.20 per dollar, within sight of last week's low around 94.40, which was the weakest level since May 2010.
"Broadly speaking we've had an appropriate adjustment in the yen to a sea-change in Japanese policy," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "So herein markets will be more focused on how the policies in Japan will be implemented and when."
Ray Attrill, co-head of forex strategy at National Australia Bank, said that with markets now pricing in aggressive policy action from Japan, further moves lower in the yen would be slow rather than rapid.
He expected the yen to weaken to 100 per dollar in 2014 rather than this year as some analysts have forecast.
Stephen Nash, director of strategy at FIIG Securities in Sydney, expected a pull-back in the yen and Japanese stocks, which rose more than 2 percent on Monday.
"It is good to see some strong policy action and discussion in Japan, which has been struggling with deflation for some time. But I think investors really need to be on their toes now, we've had significant rallies in the Nikkei, a significant move in the yen and the question is where is the growth?," he told CNBC.
(Read More: Japan Finance Minister Relieved G-20 Heat Is Off)
"We're not seeing much (growth now), we will see it at some point, but to some extent markets have jumped the gun and we should see some correction," he added, declining to give forecasts for the yen and Japanese shares.
The benchmark Nikkei stock index has climbed 27 percent in the last three months. In comparison, the S&P 500 (^GSPC), which has enjoyed a rally of its own, has gained about 12 percent, while European stocks are up about 8 percent.
The Nikkei (Nihon Kenzai Shinbun: .N225-JP) on Monday was close to touching its 33-month peak at around 11,498 struck earlier this month.
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