There is speculation that the Bank of Japan will ditch its policy of zero interest rates and increase the cost of borrowing next month.

This morning the yen stood at 211.213 to the pound, 114.527 to the dollar and at 146.302 to the euro.

Japan's zero per cent interest rate policy was a product of the deflation that hit Japan in the 1990s as consumers opted to save rather than spend.

However, a recent fall in unemployment and a rise in prices has led the bank to consider a rate rise, possibly this month.

Rate rise predictions have also been fuelled by a report from the Japanese central bank, published today, which shows large firms are more confident about the future.

The Tankan survey shows spending plans on new factories and equipment is up 11.6 per cent, ahead of forecasts.

"A rate hike this month is almost a done deal," Tsutomu Kawasaki, a fund manager at the Pension Fund Association, told the BBC.

"Japan is heading for a long-lasting economic recovery."