Concerns about the global credit market have benefited the yen, as investors unwind their carry trades in favour of more certain business.

The yen - which has recently been used by traders as a source of cheap borrowing to be invested in higher-yielding currencies - climbed from
116.92 against the US dollar to 113.11 yesterday.

Meanwhile, concern about the state of the US subprime mortgage lending sector has served to benefit the dollar against the euro and the pound.

"The dollar strengthened against those because a lot of traders had weak dollar bets and that was the main story driving currencies until the mortgage credit story swallowed it," David Gilmore, a partner at Foreign Exchange Analytics, told Associated Press.

At close of trading on Thursday, the euro had slipped to 1.3405 from 1.3460 on Wednesday, while the pound fell to 1.9792 from 1.9935.

However, Japan has not been entirely unaffected by the US subprime fallout, with many of its banks seeing share values slump as a result of losses sustained through subprime investments.