LONDON: The dollar regained a firmer footing against the yen on Tuesday as investors took a breather from a sell-off of stocks and emerging market assets that has driven money into traditional safe haven currencies.
European shares opened higher after three days which have knocked 3.5 percent off the MSCI world stock index and hammered the developing world's more fragile economies including Turkey, Argentina and Ukraine.
That has benefited the euro, dollar, yen and Swiss franc while hurting currencies more closely linked to commodity prices and growth in emerging markets like China, such as the Australian dollar.
The Aussie, helped by an upbeat business survey, and the New Zealand dollar both recovered around 0.7 percent against their US counterpart on Tuesday.
The main factor halting the sell-off, broadly a response to the prospect of tighter monetary policy in the developed world, were signs of a potential policy response from Turkey at an emergency central bank meeting later on Tuesday. But with the US Federal Reserve expected on Wednesday to signal it will continue to rein in its huge bond-buying programme this year, analysts said any respite may be brief.
"When one central bank takes action to stem the tide, that will tend to have a knock-on effect for the others," said Stephen Gallo, FX strategist at BMO Capital Markets in London. "But with the Fed message tomorrow unlikely to be dovish, I wouldn't rule out another move (later this week)."
The yen still tends to be investors' first choice as a safe haven for their money in times of stress and it hit a seven-week high against the dollar on Monday.
The dollar recovered about a third of a percent on the day in early European trade.
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