Japanese yen continued to decline against its major counterparts on Wednesday, amid speculation that the Bank of Japan (BoJ) will lag behind in raising the key interest rates compared to other major nations.

The yen fell to a 6- 1/2 -month low of 85.54 against the US dollar in Asian trading, down 12 percent from a record high of 76.31 hit on March 17. USD/JPY is likely is hit 86.0 level, if the yen continues its downtrend.

The BoJ began its two-day monetary policy meeting on Wednesday and is expected to keep key rates unchanged at 0.1 percent.

Against the euro, the yen fell to near 11-month low of 121.92, compared to yesterday's close of 120.73. The next target level for EUR/JPY is seen at 125.0.

The European Central Bank (ECB) is expected to raise interest rate by a quarter-point to 1.25 percent on Thursday to tame inflation, which stood above the central bank’s target of two percent for the third consecutive month in February.

The Chinese central bank on Tuesday surprised the markets by raising interest rates for the fourth time since October last year to curb the rising consumer prices.

The Australian dollar rose to two-and-half year high against the yen, despite a report showed that home loan approvals fell for the second straight month in February.

AUS/JPY pair hit a high of 88.73 in the Asian session, the highest level since September 2008.

The Aussie continued to gain against the yen from a low of 75.0 reached on March 17, before the G-7 nations intervened in the currency markets to weaken the Japanese currency.

Also, the Aussie strengthened to a 2-day high of 1.0377 against the US dollar, as the Federal Open Market Committee (FOMC) minutes on Tuesday indicated that policymakers were divided over ending stimulus this year.

The yen slipped to a 11-month low of 139.73 against the British pound, declining 9.7 percent from a two-and-half year high of 127.32 hit on March 17. It fell 92.29 against the Swiss franc, the lowest level since October 10, 2008.