The dollar recovered some of its losses versus the yen on Tuesday as market jitters that had caused traders to drop dollar assets to avoid trading risks declined.

The currency was trading at ¥116.27, down from ¥116.37 at the end of Monday in New York but well above the ¥115.60 it was valued at in late Monday exchanges in Asia.

Dollar trading was helped by a bounce-back by the Tokyo stock market, which finished the day's business up 1.2 per cent.

The dollar has bounced back from its lowest point said Shinkin Central Bank dealer Jun Kato, but warned against high expectations for the dollar's immediate future.

"It's too early to judge that the stock price adjustment has ended," he said. "It's not recommended buying the dollar above ¥117 for now," he told the Associated Press.

US hedge funds have continued to fuel dollar investments with yen borrowing but others have remained more cautious, saying that a stock market recovery could boost the yen.