TOKYO: The yen rose against the dollar on Tuesday as market sentiment stayed gloomy even after China's central bank announced fresh stimulus.
The People's Bank of China said late Monday it would trim the amount of funds banks must keep in reserve by 0.50 percentage point -- a mainstay PBoC tool to free up cash for lending to stimulate growth.
The move came after a weekend G20 finance ministers' meeting in Shanghai and amid lingering worries over the health of China's economy -- the world's second biggest and a key driver of global growth.
The G20 gathering stressed the use of all available policy tools to boost global growth.
But China's move had little initial impact in boosting confidence among traders, who stayed with the Japanese currency seen as a safe haven when markets are unstable.
The dollar slipped to 112.28 yen from 112.72 yen in New York late Monday.
"The RRR (reserve requirement ratio) announcement offered something for everyone," Sean Callow, a foreign-exchange strategist in Sydney at Westpac Banking Corp, told Bloomberg News.
"You could welcome the easing as supportive of growth and indicative of less pressure from capital outflows, or you could see it as a reflection of even greater weakness than expected," Callow added.
China's central bank has already slashed interest rates six times since late 2014 and lowered the reserve requirement several times, as well as injecting massive amounts of funds through open market operations.
But liquidity has tightened as the central bank buys the country's yuan currency, which has weakened on worries over the country's slowing economic growth.
The euro also fell, dropping to 122.19 yen from 122.59 yen in US trade on Monday and 124.63 yen on Friday.
The single currency was pressured by a return of deflation in the eurozone.
Consumer prices tumbled in the 19-nation currency bloc in February, pushing inflation to a negative 0.2 percent, official figures showed, and intensifying pressure on the European Central Bank to announce further stimulus.
The euro weakened against the greenback overnight, but its slide stopped in Asian trade.
It rose to $1.0881 from $1.0876 late Monday in New York.
Emerging currencies edged up against the dollar.
The oil-linked Malaysian ringgit jumped nearly 0.5 percent on a rebound in crude prices.
Indonesia's rupiah, the Thai baht and the Singapore and Taiwan dollars also booked healthy gains against the greenback.
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