The Tokyo Stock Exchange's benchmark Nikkei 225 ended the day 1.2 percent higher on Wednesday at 35,089. The index posted the second-straight day of gains as investors cheered remarks by Bank of Japan Deputy Governor Uchida Shinichi.

He said on Wednesday morning that the BOJ won't raise interest rates when financial markets are volatile.

The index slumped more than 900 points at the opening, but then bounced back over 1,100 points after Uchida's speech. It later pared some of the gains.

Investors seemed reassured by his remarks that the BOJ will maintain a relaxed monetary policy, even after the central bank raised interest rates last week.

The Nikkei 225 has seen volatile trading this week. It jumped by more than 3,000 points on Tuesday, beating the record for a single-day gain set in October of 1990.

That climb followed its largest-ever single-day fall on Monday of more than 4,400 points. The drop was an even bigger plunge than the Black Monday crash of 1987.

Last month, the Nikkei reached an all-time closing high of over 42,000 on July 11th. But since then it had been losing ground. Over the three trading days through Monday, the benchmark index fell almost 20 percent.

Uchida's comments also made waves in the currency market. The yen weakened against the dollar as the remarks indicated the interest rate gap between the US and Japan will remain for the time being.

The currency depreciated to the 147-yen level after earlier trading in a 144-yen band.