Speculation grew Wednesday that Japan would act in the coming weeks to weaken the yen, a day after its currency hit a new 15-year high against the U.S. dollar.

New government figures showed that the high yen cut into export growth in July.

A display outside a securities' firm in Tokyo Wednesday shows the selloff that followed news that a high yen cut into export growth in July. (Shizuo Kambayashi/Associated Press)

Investors were disappointed when Finance Minister Yoshihiko Noda told reporters after an emergency meeting with Prime Minister Naoto Kan that he did not discuss specific measures.

In Tokyo, the Nikkei 225 stock index lost 1.7 per cent to close at a new 16-month low of 8,845.39.

The yen traded below 84 to the dollar earlier in the week but by mid-afternoon Wednesday in North America it had weakened by 1.1 per cent from the previous close to 84.78.

A strong yen hits Japan's export-driven recovery by cutting into the value of profits made in foreign currencies by companies such as Toyota and Sony after those are converted into yen.

It also makes their prices less competitive in foreign markets.

Although the finance ministry reported that the value of exports in July climbed 23.5 per cent from a year earlier to $71 billion US, that was below June's increase of 27.7 per cent and May's 32.1 per cent rise.

The Bank of Japan will meet on Sept. 6 for a two-day policy board meeting.

"The BOJ doesn't want to do anything," said Christian Carrillo, head of Asia fixed-income strategy at Societe Generale in Tokyo. "It's really being dragged kicking and screaming to try to do something."

Analysts say the central bank will most likely decide to boost the supply of yen by extending its offerings of low-interest loans to banks. If the government does decide to act, it would be for the first time since March 2004.

With files from The Associated Press