The dollar sank to 83.32 yen in afternoon trade in Tokyo before clawing back some ground to 83.63 yen. It fell to 83.79 yen overnight in New York trade. Last month, the dollar went below 84 yen for the first time since June 1995. The euro, meanwhile, was little changed at $1.2680.
Investors have been skeptical that officials in Tokyo and other countries will intervene in currency markets, and there is little international consensus for action.
Wednesday's fall came despite earlier comments by Finance Minister Yoshihiko Noda that Japan could act to limit the yen's rise. Japan hasn't intervened in the currency market for several years.
"In the end when it becomes necessary, we will take firm action, including intervention," he said, according to Kyodo News agency.
A strong yen can hurt Japan's export-led economy, as it cuts into profits on sales made abroad by companies such as Toyota Motor Corp. and Sony Corp.
The Japanese yen and the Swiss franc have been purchased in large amounts by investors hoping for a safe as concerns rise about faltering U.S. economic recovery and banks with exposure to European debt.
Recent media reports have questioned the rigor of "stress tests" carried out on European banks and indicated some may need to raise more capital to comply with new banking standards.
Worries about countries such as Greece defaulting on their debts and the repercussions for the European banking sector helped drag the euro to a four-year low against the dollar earlier this year and weighed on stock markets worldwide.
The dollar fell to a post World War II low of 79.75 yen in 1995.