The dollar hit a record low against the euro and a basket of currencies today.
The yen held steady near its highest level against the dollar in two-and-a-half years as worries about credit markets and the health of the US economy kept investors wary of risky carry trades.
The dollar was up slightly from late US trade yesterday at 108.80. It recovered from a low of 108.29 yen hit earlier in the session on buying by Japanese institutional investors and stayed above its 2-1/2-year low of 108.25 yen hit on electronic trading platform EBS the previous day.
The euro edged up 0.1 per cent to $1.4870 and hit a record high of $1.4872 on EBS.
Many investors sat on the sidelines as regional stocks were mixed after a slump in Wall Street shares yesterday. But market players were increasingly worried about widening mortgage-related losses at financial institutions and their impact on the broader US economy.
Sentiment for the dollar was further hurt after US Treasury Secretary Henry Paulson told the Wall Street Journalon Tuesday that the number of potential US home loan defaults will grow significantly in 2008.