TOKYO, Jan 21, 2009 (AFP) - The dollar rose against the yen in Asian trade Wednesday, boosted by safe haven flows amid fresh worries about the global banking sector, dealers said.
Markets reacted cautiously to US President Barack Obama's inauguration speech, which failed to provide fresh details on measures to spur the economy and stem further damage to the financial system, dealers said.
The dollar edged up to 89.87 yen in Tokyo morning trade from 89.68 in New York late Tuesday.
The euro edged away from its one-month low against the dollar, rising to 1.2885 dollars from 1.2876. It climbed to 115.80 yen from 115.50.
Heightening concerns about the health of banks sent worldwide shares plummeting and prompted investors to buy the greenback, said Societe Generale vice president of forex sales, Kenichi Yumoto.
"There was a burst of bad news this past week emanating from the financial sector and Europe that has roiled investor sentiment," he said.
Despite the US economic woes, the US currency generally benefits from market turmoil because it is seen as a relatively safe haven due to its status as the world's main reserve currency.
Markets were worried that US financial giant Citigroup may require a new bailout or nationalisation after splitting in two. There were also mounting concerns about the fate of Royal Bank of Scotland and other British banks.
The pound stayed near an eight-year low against the greenback, changing hands at 1.3878 dollars in Tokyo trade, after failing to get a boost from Britain's latest financial sector rescue plan.
"Signs that the financial crisis is deepening in the UK has shaken investor confidence in the currency," noted NAB Capital strategist John Kyriakopoulos.
"The cost of financing this rescue package... has led to investors betting that the British government may lose its top AAA credit rating," he added.
That would put Britain alongside Spain, which lost its Standard and Poor's triple-A rating on Monday. S&P has also slashed Greece's rating, and is reviewing Ireland's and Portugal's.
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