The dollar eased against the yen in Asia on Tuesday as traders focus on Washington, where lawmakers say they are close to a deal to re-open the government an avert a debt default.
The greenback bought 98.49 yen in Tokyo trade against 98.67 yen in New York on Monday afternoon.
The euro bought $1.3554 and 133.51 yen compared with $1.3559 and 133.79 yen.
Japan's Finance Minister Taro Aso on Tuesday voiced growing frustration with the protracted US debt-ceiling standoff, calling on politicians to get to grips with the situation.
“Many of them don't seem to understand well the magnitude of the international impact this problem could have,” he told a regular news conference.
The Tea Party, the Republican Party's ultra-conservative faction, have been berated as political novices bent on upending government, with members resisting efforts to pass spending bills or raise the debt limit without extracting dramatic concessions from the Obama administration.
Failure to raise the government's borrowing limit by October 17 would not only lower the value of Treasury bills held by Japan but would also rock international financial markets.
But there is growing hope for a deal to avert the crisis would be struck soon after a series of talks in Washington.
The dollar could climb toward the 99-yen level in the short-term, but not higher, as expectations increase that the crisis may be defused and a default averted, said Osamu Takashima, chief FX strategist at Citigroup Global Market Japan.
Top Senate leaders said they were within striking distance of an agreement on Monday.
Signs of progress prompted the White House to postpone a meeting of key power brokers on the crisis that had been due to take place at 19h00 GMT on Monday.
“While the meeting has been postponed, optimism is rising that a deal could be reached within the next few days,” Takashima said.
He said he thought risk sentiment was also being supported by expectations fiscal dove Janet Yellen will stick to an easy money policy if she becomes the next head of the Federal Reserve.
President Barack Obama has nominated Yellen to succeed Ben Bernanke when his term in office ends in the new year. - Sapa-AFP