TOKYO: The yen resumed its rally on Friday after getting a boost in US trade over fears that the Yemen crisis will explode into a wider Middle East conflict.
While the Japanese currency weakened in morning Tokyo trade, it picked up in the afternoon with the dollar sitting at 119.15 yen, down from 119.18 yen in New York.
The euro also slipped to 129.61 yen, from 129.71 yen, and $1.0880, slightly off from $1.0884.
US traders on Thursday moved into the yen on news that jets from a Saudi-led coalition had targeted Shiite rebels in support of Yemen's president, who fled his presidential complex Wednesday after it was attacked by a warplane.
Iran condemned the Saudi-led action, which has exacerbated longstanding Saudi-Iranian tensions and raised fears over a broader regional conflagration.
Investors tend to buy the yen as a safe-haven during times of uncertainty and turmoil.
In the morning, the unit gave up some of its gains after official data showed that Japanese inflation stalled in February with a key measure of prices flat for the first time in nearly two years.
The disappointing figures deal a blow to the Bank of Japan's efforts to conquer deflation, and raise the possibility of more monetary easing later this year just as the US Federal Reserve eyes an interest rate hike.
"It's clear that Japan will maintain its accommodative monetary policy and tapering is not in sight while it's also clear that the US is just about the only place where interest rates will rise," Yunosuke Ikeda, head of currency strategy in Tokyo at Nomura Securities, told Bloomberg News.
"There is no change to the basic scenario of a strong dollar."
Also helping the greenback, new claims for US unemployment insurance benefits fell last week, continuing to trend lower as the labour market improves in a sign of a broader recovery for the world's top economy.
Investors will be keeping a close eye on a speech by Fed chief Janet Yellen later in the day to see if she offers up any clues about the timing of a long-awaited rate hike.
The dollar was mostly weaker against other Asia-Pacific currencies.
It slipped to Sg$1.3687 from Sg$1.3697 on Thursday, to Tw$31.22 from Tw$31.29, to 1,103.40 South Korean won from 1,105.01 won, and to 32.58 Thai baht from 32.59 baht.
The greenback also weakened to 44.80 Philippine pesos from 44.83 pesos while it rose to 13,043.10 Indonesian rupiah from 13,016.50 rupiah. It was unchanged at 62.63 Indian rupees.
The Australian dollar slipped to 78.03 US cents from 78.18 cents and the Chinese yuan edged up to 19.16 yen from 19.15 yen.
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