[TOKYO] The yen edged up Tuesday ahead a G7 meeting where currencies will be high on the agenda following Japan's threat to intervene in forex markets to tame the surging unit.
Finance ministers and central bankers from the Group of Seven countries hold a two-day meeting from Thursday in northern Japan, with US President Barack Obama and other G7 leaders attending a separate summit between Tokyo and Osaka next week.
Competitive currency devaluations will be the most pressing topics at this week's meeting, after Japanese officials said they might wade into markets to stem the yen's recent rise to 18-month highs against the US dollar.
That could breach a G20 agreement not to unilaterally devalue currencies to gain economic advantage.
But analysts said Tokyo was unlikely to step into markets imminently, owing to diplomatic sensitivities while the yen has given up some of its recent gains.
"The Japanese way would not be to intervene ahead of the G7 (finance minister) meetings or the summit the following week, and volatility isn't all that great," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, told Bloomberg News.
"The US dollar is coming back and that's where it will be for the second half of the second quarter and into the third quarter."
On Tuesday, the US dollar edged down to 108.97 yen from 109.06 yen Monday in New York, but sharply up from the levels around 105.50 yen touched two weeks ago.
The euro ticked down to US$1.1314 and 123.29 yen from US$1.1318 and 123.43 yen in US trade.
A rebound in crude prices boosted demand for riskier emerging currencies, with the oil-linked Malaysian ringgit tacking on 0.3 per cent against the US dollar and the South Korean won advancing 0.6 per cent.
The Indonesian rupiah, Thai baht and Taiwan's dollar also booked healthy gains.
The commodity-linked Australian dollar jumped 0.8 per cent after minutes from the last meeting of the country's central bank suggested policymakers will hold off on cutting borrowing costs further.
The bank cut interest rates 25 basis points to a historic low of 1.75 per cent this month, following lower than expected inflation, sending the currency tumbling.