The dollar dropped in Asia Tuesday on jitters about U.S. credit problems following a decline on Wall Street overnight.
The dollar fell to 115.56 yen midafternoon from 116.13 yen late Monday in New York. The euro fell to US$1.3626 from US$1.3653.
"Nobody is foolish enough to resume high-risk investment right away after experiencing a market collapse," said Kazuyuki Takami, a senior dealer at Bank of Tokyo-Mitsubishi UFJ.
The yen has been getting stronger in recent weeks as investors liquidate so-called yen-carry positions, in which they borrow yen cheaply to invest in higher-yielding foreign assets. Investors have to buy yen to repay the low-interest loans when they exit yen-carry trades.
Takami said the greenback may fall to 114.80 yen if European and U.S. stocks fall later in the day. Before the subprime mortgage crisis, the dollar traded as high as 122 yen in July.
The dollar was mostly higher against other regional currencies, climbing to 9,403 Indonesian rupiah from 9,380 in the previous session, 1.5224 South Korean won from 1.5208, and 33.005 Taiwan dollar from 32.997.