The yen started falling again Friday amid speculation that the upcoming meeting of finance ministers and central bankers in Moscow will not criticize Japan for pushing forward policies that have seen the currency fall sharply.
Big swings in the currency markets over the past few weeks have raised speculation of a "currency war" — where countries competitively devalue their currencies to gain a competitive edge — that could derail the global economic recovery. Worries that Japan is embarked on an economic course that includes a sharp depreciation of the yen have lain behind the recent tensions.
Ahead of the Group of 20 meeting of leading industrial and developing nations, which is due to start later Friday and run through Saturday, the yen was initially in favor with traders anticipating some sort of pressure being exerted on Japan's finance minister and central banker to at least commit to not allow the yen to fall much more.
However, as the day wore on, the yen lost its shine on talk that the post-meeting communique will not single out any country. There's even speculation that the communique may not say anything about the targeting of exchange rates. Earlier this week, the Group of Seven leading industrial nations said that none of them were in the business of targeting exchange rates.
"The yen has reversed early gains and is now the weakest major currency on reports the language of the G-20 statement may differ from that of the G-7 countries," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank.
"The G-20 is expected to urge members to avoid competitive devaluation, but not echo the G-7 view that exchange rates should not be a target of policy," he added.
Having traded higher earlier, to the detriment of Japanese stocks, the yen was on the retreat again, with the dollar 0.4 percent higher at 93.37 yen. The euro was also 0.4 percent firmer at 124.72 yen.
The yen has been on the retreat over the past few weeks as the new Japanese government pushed the Bank of Japan to accept a higher inflation target. This has triggered speculation the bank will create more money. The prospect of more yen in circulation has been the main reason behind the currency's recent fall. Earlier this week, the yen fell to a near two-year low against the dollar and a three-year trough against the euro.
Though leading Japanese officials have voiced a desire for a lower yen as a way to boost exports, they insist they're not intervening in the markets directly to lower the yen. They also note that other central banks, such as the U.S. Federal Reserve and the Bank of England, have pursued similar policies over the past few years.
Meanwhile, stocks ground higher through the day.
In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 6,344 while France's CAC-40 rose 0.5 percent to 3,686. Germany's DAX was flat at 7,632.
In the U.S., the Dow Jones industrial average was up 0.1 percent at 13,990 while the broader S&P 500 index rose the same rate to 1,523. A fairly positive University of Michigan consumer confidence survey helped offset slightly disappointing industrial production figures for January.
Earlier in Asia, the yen's then-strength hit Japanese stocks as it makes life more difficult for its exporters. The Nikkei 225 stock average fell 1.2 percent to close at 11,173.83.
Elsewhere in Asia, Hong Kong's Hang Seng added 0.1 percent to 23,444.56 while South Korea's Kospi rose 0.1 percent to 1,981.18. Mainland China and Taiwan were closed for Lunar New Year holidays.
Oil markets were subdued too, with the benchmark New York rate down $1.84 at $95.47 a barrel.
Pamela Sampson in Bangkok contributed to this report.