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Hong Kong - The yen soared more than 2% against the dollar on Thursday and Tokyo's Nikkei index plunged 3% after the Bank of Japan (BoJ) shocked markets by not ramping up its stimulus.
Traders had widely expected the central bank to unveil fresh measures to shore up the world's number three economy after this month's deadly earthquakes in southern Japan and a string of weak data.
But it decided to stand pat, saying it wanted to gauge the effects of a negative interest rate policy introduced in January. It also pushed back its timeline for hitting a 2.0% inflation target.
"It's a total shock," said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, said.
"From currencies to equities to everything - you can see the reaction in the markets. I can't believe this. It's very disappointing."
The greenback plunged as low as ¥108.77, sharply down from ¥111.78 earlier in the day, while the Nikkei stock index was down 3.0%, having gone into the lunch break 1.4% higher.
Speculation had grown that the BoJ will act after this month's double earthquake in southern Japan, which led to the temporary closure of several factories and compounded problems for an already weak economy.
And on Thursday morning a slate of weak data on Thursday - including the biggest fall in consumer prices for three years - reinforced the struggle authorities have in kick-starting growth and igniting inflation in the country.
The news cast a pall over the region's trading floors after a bright start that came in response to Federal Reserve's positive outlook on the global economy.
Energy firms rise
Shanghai was 0.7% lower by the break, while Seoul was down 0.6% and Taipei shed 1.1%. Sydney added 0.4% and Hong Kong was 0.5% up having been more than one percent higher mid-morning.
After a much-anticipated policy meeting, the US central bank decided against hiking interest rates and stood by its stance that any further rises would be slow and small as economic growth remained relatively weak.
However, its post-meeting statement suggested it was less concerned about the global economic outlook than it was at the start of the year when it cited turmoil in world markets for lowering its forecasts for rate hikes in 2016.
While analysts argued over what the Fed's comments meant for the timing of its next rate rise, investors welcomed the prospect they will stay low well into the second half of the year.
The Dow and S&P 500 climbed, although the tech-rich Nasdaq was dragged down by weak earnings from Apple and Twitter.
Oil prices ended on Wednesday at fresh 2016 highs after data showed US production had fallen in the week to Friday, which in turn boosted energy firms in Asian trade.
Sydney-listed Woodside Petroleum climbed more than 2%, while BHP Billiton was up 3.7%. In Hong Kong, PetroChina added 1.4% and Sinopec was 1.6% up.
