Tokyo - The yen sank again Monday, extending losses after the Bank of Japan unveiled shock stimulus last week, while emerging currencies took a hit as weak China manufacturing figures stirred worries about the world's number two economy.
Japan's central bank on Friday announced it would adopt a negative interest rate policy, meaning it would effectively start charging commercial lenders to park their cash with it.
The move - intended to ramp up lending in order to kickstart the economy and fend off deflation - spurred a rally across world markets and sent the yen tumbling.
"The BoJ decision will have a lasting negative impact on yen because speculative positioning was the wrong way," Sean Callow, a Sydney-based foreign-exchange strategist at Westpac Banking, told Bloomberg News.
He added that expectations that it would make even more cuts in the coming months would weigh on Japan's currency.
In Tokyo, the dollar advanced to 121.27 yen (S$1.42) from 121.12 yen Friday in New York. The greenback was trading around 118.60 yen on Friday before the announcement.
The euro strengthened to 131.51 yen from 131.19 yen in US trade, while it also advanced to US$1.0844 (S$1.54) from US$1.0831.
On Monday, an official index of Chinese manufacturing activity fell to a more than three-year low in January.
The news follows a string of data indicating that the once-mighty growth rates in the Asian giant - the world's number two economy and a key driver of global growth - are fading fast.
The weak reading weighed on the commodity-linked Australian dollar, which declined 0.24 per cent against the greenback, while other emerging currencies also fell.
South Korea's won slumped after data showed the country's exports, the main driver of the economy, suffered their steepest decline since August 2009, extending what is now a 13-month losing streak.
The won weakened 0.48 per cent, while the oil-linked Malaysian ringgit was down 0.14 per cent.
Taiwan's dollar ticked down 0.08 per cent and the Singapore dollar lost 0.04 per cent.
However, the Indonesian rupiah surged 1.15 per cent on speculation that the BoJ move and more possible easing by the European Central Bank will push investors into higher-yielding, riskier assets.