The Bank of Japan cut its key interest rate to 0.1 percent from 0.3 percent Dec. 19 in the face of pressure to take a bold step to check the yen's rise and provide more liquidity to cash-strapped firms amid the deepening recession.

Speculation had been rife that the BOJ would cut the rate, the second cut in seven weeks, since the U.S. Federal Reserve Board adopted a near-zero interest rate policy Dec. 16 to stem further financial turmoil.

The Fed's move dropped its funds rate below the Japanese key rate and, as a result, accelerated the yen's rise against the dollar. The dollar briefly traded below ¥88 on Dec. 17, its lowest level in 13 years.