"I think that this is a one-off thing, but we cannot ignore the effects. Last year the government made some decisions on how to deal with this and we will prepare for this fully."
The strength of the yen is also affecting Japanese manufacturers, with the US being a significant export market for them. The surging yen makes exports more expensive in overseas markets and cuts profits being channelled back home.
Increasing oil and raw material prices also took their toll on exporters, while giving commodity stocks a boost.
Masanaga Kono, strategist at Societe Generale Asset Management, said: "High-flying blue chip exporters are going to have a tough time coping with rising commodity prices, a stronger yen and a slowing US economy."
Unhappy new year
Nissan Motor fell 9.2 per cent to 1,117 yen; Toyota Motor finished 4.3 per cent lower at 5,780 yen after hitting a 12-month low of 5,740 yen.
|Women in kimono opened the stock|
exchange for the new year [EPA]
Sony fell 6.6 per cent to 5,790 yen, while Canon dropped five per cent to 4,940 yen.
Domestic problems have also taken their toll on the economy.
The government of Shinzo Abe, the former prime minister, had been dogged by a series of damaging scandals, particularly the pension scheme.
A government agency admitted to losing records relating to millions of payments, raising questions about the government's economic credentials.
Tokyo's broader Topix index, which includes all shares on the exchange's first section, lost 63.77 points, or 4.32 per cent, to 1,411.91. Other Asian exchanges - most of which opened 2008 on Wednesday - have not followed Japan.
In Hong Kong, the Hang Seng rose 2.3 per cent in morning trade, while benchmark indices in China, Singapore and South Korea are up by more than 0.5 per cent in afternoon trade.
The Tokyo Stock Exchange resumes full-day trading on Monday.