The Japanese Yen declined on Wednesday after reports an official at the Bank of Japan played down the probability of a rate rise in the near-term, easing investor fears of a further rise in the currency that may once again spook global markets.

Following the comments by the deputy governor of the Bank of Japan (BOJ), Shinichi Uchida, the Yen fell 2.5% to a low of 147.94 per Dollar. At the time of writing the greenback was last up 1.7% at 146.79 Yen.

“As we are seeing sharp volatility in domestic and overseas financial markets, it's necessary to maintain current levels of monetary easing for the time being,” Uchida stated.

His comments, which differed from governor Kazuo Ueda's aggressive statements last week following the central bank’s unexpected interest rate hike, led to a rise in Japanese stocks, leaving them relatively unchanged for the week, Reuters reports.

The BOJ's interest rate increase last week, coupled with Tokyo's intervention in early July, prompted investors to exit previously favoured carry trades, where traders borrow Yen at low rates to invest in higher-return assets.

The unwinding of carry trades, along with weak US jobs data and concerns about an artificial intelligence bubble, has caused global stocks to plummet this week, beginning with a 12% drop in Japanese equities on Monday.

“I think it’s become increasingly clear that the BOJ hawkish turn last week could be a policy error. Japan's economy is actually in poor shape, especially domestic demand,” according to Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Furthermore, the Dollar index, measuring the currency against six rivals, edged up 0.15% to 103.13, moving further away from the seven-month dip of 102.15 hit on Monday.

“Uchida has saved the carry trade - for now,” said Rong Ren Goh, a portfolio manager at Eastspring Investments. “Japan policy is one of the important moving parts of the overall risk structure in the market. The other important ones would be US economic data, which in turn informs Fed policy trajectory.”

The Yen's decline was widespread, with the Mexican Peso, New Zealand Dollar, and Australian Dollar rising significantly against it.