The dollar was mixed in Asian trade Tuesday ahead of a US Federal Reserve meeting, with speculation growing that policymakers will further reduce the bank's stimulus programme.
In midday trade, the dollar bought 102.70 yen, compared with 102.56 yen late in New York, and well up from the seven-week low of 101.77 yen in Tokyo earlier Monday.
The euro rose to 140.47 yen from 140.21 yen and $1.3677 against $1.3670, after a closely watched index on Monday showed German business confidence surged in December.
Global equity and forex markets have been in turmoil since the end of last week after a plunge in the Argentine peso sparked fresh worries about developing nations' economies.
The sell-off in Buenos Aires came on the back of data indicating manufacturing activity in China -- a key driver of global growth -- had contracted in January.
The growing pessimism sent investors to seek out safer, lower-return assets, particularly the Japanese yen, which is considered a safe haven in times of economic uncertainty.
"Markets remain skittish and the mood is somewhat cautious as the focus remains on emerging market travails....the risk of an intensification of market tensions suggests that any yen decline will be limited in the short term," Credit Agricole said.
"The current bout of pressure may yet be contained but there is still some way to go before market stress is alleviated," it added.
The Fed on Wednesday will wrap up a two-day meeting and investors will be looking to see if it announces any further cuts to its stimulus, which could fuel fears of a capital flight away from emerging markets as dealers look for safer investments.
The US central bank last month said it would reduce its bond-buying by $10 billion-a-month from January to $75 billion, citing a pick-up in the world's biggest economy.
Dow Jones Newswires reported Monday that central banks in several Asian nations including Indonesia and Thailand appear to have stepped into forex markets to support their currencies, although none confirmed such moves.
The latest sell-offs in risky assets are an indication of declining confidence in the global economy, dealers said, a trend made worse by dismal US jobs figures this month and data showing a slowdown in emerging economies.