LONDON: The yen's advance halted on Monday as Japan's leader criticised excessively volatile currency markets and as gains for China's yuan on its first full day's trade in a week helped settle global financial nerves.
A stock market sell-off since the start of February has driven a wave of capital to seek the traditional safety of Japan, driving the yen 7 percent higher and prompting speculation Tokyo would intervene against the currency.
Japanese Prime Minister Shinzo Abe told parliament on Monday that "excessive currency volatility is undesirable" and said appropriate action would be taken in the exchange rate market as needed.
Abe also said he hoped the Group of 20 finance leaders would take appropriate measures to address global economic problems when they meet in Shanghai next week.
Chinese central bank chief Zhou Xiaochuan played down the benefit of capital controls and said it was quite normal for currency reserves to fall as well as rise.
The yen and the euro, another, slightly shakier choice as a safe haven for investors' money in the past week, both fell around half a percent against the dollar.
The Australian and New Zealand dollars, both commodities-linked currencies, each gained around half a percent against the dollar.
"This morning, it's all 'risk on'," said Kit Juckes, a strategist with Societe Generale in London.
Onshore rates for the yuan, whose fall since December has been one of the big elements unsettling markets, gained more than 1 percent from levels seen in its last trading before the Lunar New Year holiday began more than a week ago.
That broadly reflected a weakening of the dollar against its developed world peers over that period, but not its moves against other emerging Asian currencies. Offshore rates for the yuan were steady.
The mood in Europe remains extremely fragile. Many analysts pointed to grim Japanese growth data and China's January trade performance, which was worse than expected.
"China has shown its mettle with a firmer fix but am I impressed? Not overly," said Tobias Davis, head of corporate treasury sales at Western Union in London.
"It's a well-received relief rally in risk sentiment which is well overdue. But the China data was terrible and Japan's woes continue."
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