The US unit climbed to 82.40 yen in Tokyo afternoon trading from 82.31 yen in New York late Tuesday.

The euro firmed to $1.3645 from $1.3621, and rose to 112.43 yen from 112.20 yen.

The dollar attracted purchases against the yen on the back of the rise in US Treasury yields, but was weighed by sell orders from Japanese exporters, dealers said.

The euro was also higher as investors were relieved that China's rate hike had a limited impact on regional stock markets, thus supporting the risk-sensitive currency, they said.

Market reaction was muted after Beijing on Tuesday hiked interest rates for the third time in four months as policymakers struggle to tame inflation and property prices.

The People's Bank of China said it would raise the one-year deposit and lending rates by 25 basis points each, taking them to 3.0 percent and 6.06 percent respectively.

In October, the bank raised rates for the first time in nearly three years to restrain a flood of liquidity that has been fanning inflation and hiking property prices. They raised them again on Christmas Day.

"China's rate hike gave little surprise to the market as such a move around the Lunar New Year holiday had been widely expected," said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.

The increase was "unlikely to have an adverse influence on the Chinese economy," Yuichiro Harada, senior dealer at Mizuho Corporate Bank, told Dow Jones Newswires.

"The market is looking at rate hikes as a sound process to curb inflation. The global economic recovery is likely to continue."

The Chinese stock market, which reopened Wednesday following the week-long holiday, was lower in afternoon trading but the size of the decline proved limited, dealers said.

Forex dealers were awaiting congressional testimony by Federal Reserve chairman Ben Bernanke later in the day amid growing optimism about the global economy, dealers said.

"As US economic indicators released recently have been positive, market participants are watching whether Bernanke would give any hint at the course of monetary policy to follow the current quantitative easing phase," Kawabe said.

The dollar was mixed against other Asian currencies.

The unit rose to Sg$1.2740 from 1.2724 on Tuesday, to 1,105.80 Korean won from 1,104.32, to 8,918.75 Indonesian rupiah from 8,915.50 and to 30.71 Thai baht from 30.70.

The greenback fell to Tw$28.77 from 28.91 and to 43.38 Philippine pesos from 43.45.