The Japanese yen plummeted to a near seven-year low on Friday as the Bank of Japan surprised markets with some additional easing measures as it wanted to pre-empt deeper deflationary threats for the economy.

The BoJ said it will purchase more shares of exchange-traded funds and real estate investment trusts and extend the duration of its portfolio of Japanese government bonds (JGBs).

The central bank also said it will expand the monetary base by 10-20 tn yen to 80 tn yen, as it sees continued downside risks to price pressures.

"If the current downward trend in prices remains, albeit in the short term, there is a risk that the conversion of deflationary mindset, which has so far been progressing steadily, might be delayed," the BoJ statement said.

"To pre-empt manifestation of such risk and to improve the momentum of expectation formation, the Bank judged it appropriate to expand the quantitative and qualitative monetary easing."

The September inflation data from Japan revealed on Friday a second straight month of slowing, confirming the central bank's fears.

The USD/JPY pair rallied to 110.70 on Friday, its highest since January 2008, and translating the monthly change in the yen to a 0.95% decline.

After touching a six-year low of 110.10 on 1 October, the yen had been on a corrective path for the next two weeks, but the second half of the month saw a return to the declining trend.

The move on Friday will mean the Japanese currency will end lower for fourth straight month. At Friday's high of USD/JPY, the yen was 4.8% down so far in 2014.

Dollar Rallies

The US dollar rallied across the board as the yen plunged and as the US GDP data on Thursday positively surprised, bolstering hopes of earlier US rate hike.

EUR/USD fell to 1.2559 from the previous close of 1.2614, getting closer to the two-year low of 1.2500 touched on 3 October.

GBP/USD slipped to 1.5969 from 1.6001. The pound is nearing the 11-month low of 1.5875 touched early this month.