Japan's top currency official said on Wednesday that Tokyo was "on standby" to intervene after the yen fell to a new year-low against the dollar and plunged against the euro, Bloomberg reported.

The yen dropped below 151 against the dollar overnight after the Bank of Japan loosened its control of bond yields but stuck with sub-zero short-term interest rates.

Against the euro, the Japanese currency fell to its weakest since 2008.

"We're on standby," currency official Masato Kanda told reporters, according to Bloomberg News. 

"But I can't say what we'll do, and when — we'll make judgments overall, and we're making judgments in a state of urgency."

On Wednesday the yen was trading at 151.40 against the dollar compared to 151.72 overnight.

Yields on Japanese government bonds are much lower than those elsewhere, prompting investors to move money elsewhere in search of better returns.

This has added to the yen's weakness, which makes exports cheaper but imports more expensive, stoking inflation in the world's third-biggest economy.

In September 2022, Japan's finance ministry intervened to support the yen for the first time since 1998 after the yen fell to 146.

It spent around $20 billion, followed by another $40 billion in subsequent weeks, as the currency dropped beyond 151 per dollar for the first time in 32 years.

Late Tuesday a report from the finance ministry showed that it did not intervene last month as had been suspected by some in the market.

Higher inflation has pressured Prime Minister Fumio Kishida, whose poll ratings have hit their lowest levels since taking office two years ago.

His government was expected to announce on Thursday a stimulus package reportedly worth 17 trillion yen ($112 billion).