The safe haven yen shed Monday's earlier gains after China's central bank unveiled a fresh step to curb offshore speculation in the yuan and also set a firmer guidance rate, soothing worries about the risk of a rapid fall in the yuan.
The yuan's slide to a near-five year low earlier this month had stirred renewed concerns about China's economic health and the outlook for global growth, heightening investor risk aversion.
Such concerns about the yuan eased for now, as the People's Bank of China announced a new move to curb offshore speculation in the currency, and also set a firmer midpoint rate for the yuan on Monday.
The dollar edged up 0.1 percent to 117.24 yen JPY=, up from a session low of 116.56 yen touched in early Asian trade on Monday as well as Friday's 4-1/2 month low of 116.51 yen.
The Australian dollar, often used as a liquid proxy for China plays, rose 0.8 percent to $0.6914, pulling away from a near seven-year low of $0.6827 set on Friday.
Still, market participants remained sceptical about the prospects for a sustained improvement in risk appetites, given the selloff in global equities seen so far in January.
Sterling remained on the defensive, dented by worries about Britain's economic outlook and jitters over a looming referendum on British membership in the European Union.
On Monday, sterling touched a low of $1.4251 GBP=D3, just below Friday's trough and setting a fresh 5-1/2 year low. Sterling was last up 0.1 percent at $1.4273.The euro eased 0.2 percent against the dollar to $1.0892 EUR=.
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