Beijing - A recent rally in the yen fizzled on Friday after Chinese authorities moved to stop wild market volatility stoked by concerns about the world's number two economy, a major driver of global growth.
The hair-raising losses on mainland Chinese markets this week had prompted a flight to Japan's currency -- seen as a safe bet in times of turmoil and uncertainty.
“The yen is the pre-eminent risk-adverse currency, and the euro is not far behind,” Kit Juckes, global strategist at Societe Generale, told Bloomberg.
“Both are places where capital is exported to invest in attractive opportunities around the world. When things go badly wrong, that's when it comes back.”
China moved to ease the panic late Thursday, removing a mechanism blamed for fuelling sharp sell-offs that suspended mainland markets early twice in the space of four days and fanning losses from Asia to Europe to the Americas.
Dealers said that, rather than easing selling pressure, it boosted sell orders among investors who wanted to avoid being stuck with shares they did not want to hold.
Authorities also set the central rate for the yuan currency marginally higher against the US dollar on Friday, ending eight days of falls that were also blamed for the global turmoil.
In Tokyo, the dollar rose to 118.21 yen from 117.65 yen Thursday in New York, although it is still well down from levels above the 120 yen mark seen earlier in the week.
The euro rose to 128.72 yen from 128.58 yen, while it weakened to $1.0885 from $1.0928 in US trade.
On Thursday, official data showed eurozone unemployment dropped to its lowest level in four years in November, offering a glimmer of hope for the bloc's hard-hit economy.
“There wasn't much global data overnight but the minor releases were euro-positive,” National Australia Bank said in a commentary.
Also boosting sentiment, oil prices rebounded from 12-year lows in Asia Friday.
Emerging currencies got a boost, with the South Korean won, Indian rupee, Philippine peso and Thai baht all stronger against the dollar.
The Australian dollar, closely linked to China's prospects, also ticked higher.
Investors are awaiting the release later in the day of US jobs data as the turbulence in China raises questions about when the Federal Reserve will next tighten monetary policy.
The US central bank announced the first interest rate hike in almost a decade in December.
AFP