Chūō, Tokyo

Stocks plunged in Tokyo on Monday after the yen surged in reaction to Shigeru Ishiba's election last week as the head of Japan's ruling party, which boosted expectations the Bank of Japan will continue hiking interest rates.

Japanese stocks surged and markets across Asia started strong on Friday, tracking substantial gains on Wall Street after encouraging U.S. retail sales data reassured investors about the health of the world's biggest economy.

The Bank of Japan raised its key interest rate and revealed plans to halve its bond purchases in actions that underscore its determination to normalize its policy.

Japan's central bank on March 19 scrapped its negative interest rate as it finally began unwinding one of the world's most aggressive monetary easing programs.

The maverick policy dating back to 2013 was aimed at jump-starting economic growth and inflation after the country's "lost decades" of stagnant activity and prices in the world's number four economy.

The Bank of Japan on June 17 stuck to its long-held monetary easing policy even as other central banks around the world hike interest rates to tame inflation.    

But it said it would "pay due attention" to foreign exchange markets, a rare comment that comes after the yen hit a 24-year low against the dollar.    

The Japanese government on April 21 nominated Yukitoshi Funo, a senior adviser to Toyota Motor, to join the Bank of Japan's  policy board.

The 68-year-old is set to replace Yoshihisa Morimoto, whose five-year term on the central bank's nine-seat board will end on June 30.