The dollar rose in Asia Friday as investors swapped the yen for higher yield overseas assets to take advantage of low Japanese interest rates.
The dollar was trading at 121.16 yen midafternoon, up from 121.11 yen late Thursday in New York. The euro fell to US$1.3422 from US$1.3432.
Traders said the dollar's climb likely wouldn't last, with a global stock fall expected to hurt sentiment for the dollar and the euro.
If the global stock sell-off continues, investors will reduce risks by unwinding the yen-carry trades, in which they borrow yen at low interest rates to earn higher returns elsewhere, said Masashi Matsuzawa, a senior dealer at Mizuho Corporate Bank.
The dollar could fall to as low as 120.50 yen, traders said.
On Friday, the Nikkei Stock Average of 225 selected issues fell 1.52 percent to close at 17,779.09 points, following a 1.48 percent slide in the Dow Jones Industrial Average overnight.
The dollar was mostly higher against other regional currencies, rising to 46.320 Philippine pesos from 46.090 the previous day, 9,058 Indonesian rupiah from 8,875, and 929.7 South Korean won from 926.8.