Shares in Toyota, Panasonic and Japan’s biggest banks were among the biggest victims of a huge rout of Tokyo stocks on Thursday, as investors absorbed the previous day’s unexpected interest rate increase by the Bank of Japan and a renewed surge in the yen.

Following the BoJ’s decision to raise its benchmark interest rate to 0.25 per cent — the highest level in 15 years — the yen continued to strengthen against the dollar, reaching ￥148.56 during early Thursday trading.

The Japanese currency has risen 4 per cent over the past two weeks as hedge funds rapidly cut their exposure to speculative yen short positions. Traders are guessing the majority of such bets have now been cleared from the market, with a new focus on how much further the BoJ’s rate-raising cycle might run.