TOKYO: Yen rebounded slightly in Tokyo on Friday as exporters snapped up the currency at a bargain rate after a plunge caused by the downgrading of Japan's credit rating by Standard & Poor's.
The dollar slipped to 82.67 yen but retained most of the gains made in Thursday trade in New York, where it bought 82.86. The dollar is still sharply higher than the 82.12 yen level seen late Thursday in Tokyo.
The Japanese unit plunged on Wall Street after ratings agency S&P cut Japan's sovereign debt rating to "AA minus" from "AA", accusing Tokyo of lacking a "coherent strategy" in efforts to ease a mountain of debt.
But Tokyo remained relatively calm, with investors already well aware of Japan's fiscal crisis, the worst among the industrialised world.
Exporters hunted for bargains and picked up the yen for routine settlements at the end of the month.
Forex traders said they did not expect more significant losses for the yen given that the downgrade did not come as a surprise, although the timing of S&P's announcement caught many off guard.
"The news comes at a time when markets are already focused on sovereign debt, and will undoubtedly shake nerves," David Croy, interest rates strategist at ANZ Bank in Wellington, told Dow Jones Newswires.
"It's difficult to envisage significant contagion at this stage, particularly with so many bonds held onshore," he said.
"After all, it's long been known that Japan has mammoth debts, but the lack of progress is what seems to have got the ire of S&P," Croy said.
The euro turned softer on renewed worries over the credit problems in the eurozone, analysts added.
The single currency bought $1.3711 and 113.27 yen, slipping from $1.3730 and 113.85 yen in New York.
The shock of the downgrade also subsided in the bond market.
Japanese government bonds rebounded after a sell-off late Thursday following the rating downgrade.
The yield, which moves inversely to the price, on the benchmark 10-year bond stood at 1.220 percent, off from a low of 1.210 percent, compared with Thursday's close of 1.250 percent.
Weakness among Japanese stocks encouraged investors buy bonds, analysts said.
The greenback was mixed against regional Asian currencies, rising to Sg$1.2806 from Sg$1.2787 on Thursday and to 31.06 Thai baht from 30.82.
It was nearly unchanged at Tw$29.01 compared with Tw$29.03 and at 1,114.10 Korean won compared with 1,114.15.
The dollar fell to 9,025.00 Indonesian rupiah from 9,032.50 and to 44.08 Philippine pesos from 44.13.
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