By Tatsuo Ito

The yen rose against some high-yielding currencies in Asia Wednesday as fresh concerns over the situation in Ukraine prompted investors to trim their bets in favor of the safe haven currency.

Investor risk sentiment was hurt after Russian President Vladimir Putin said Tuesday he has ordered his government to prepare retaliatory measures against U.S. and European sanctions imposed on Russia last week.

While traders hope that Mr. Putin's provocative stance won't continue to make matters worse, they still expect it to take time for the conflict to be resolved.

"Geopolitical risks over Ukraine are becoming a longer-term issue. We consider the effects of the Tuesday's news alone as temporary," said Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank.

The yen strengthened against high-yielding currencies such as the New Zealand, Australian and Canadian dollars, with the kiwi falling to a two-month of Y86.41.

Junya Tanase, chief forex strategist at JPMorgan in Tokyo said the yen is likely to strengthen in crosses should the U.S. stock market fall and an index that gauges investor fears continue to rise.

A drop on Wall Street sent the CBOE Volatility Index, known as the VIX, surging by 11.57% to 16.87 Tuesday.

"Although there's no specific level to be alarmed about, a rise above 20.00 could stoke risk-off sentiment further," Mr. Tanase said.

Under these conditions, both the dollar and the yen tend to be bought as safe-haven currencies.

At 0450 GMT. The dollar was at Y102.55 against Y102.59 in late New York trade Tuesday. The euro was down at $1.3367 against $1.3375.

The euro is likely to remain in a downtrend, but some traders say a rise in tension over the Ukraine situation hasn't necessarily led to across-the-board selling.

Credit Agricole's Saito said increasing jitters are prompting European operators to buy euros as they normally bring back funds home to make up their some balance-sheet losses on their financial exposure to Ukraine.

"It's wrong to assume that an increase in geopolitical risk means the selling of the euro" as long as direct fighting between Russia and Ukraine that could invite a broad sell-off from global investors is averted, Mr. Saito added.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.05% at 73.98.

Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT

Latest Previous %Chg Daily Daily %Chg

2150 GMTHigh Low 12/31

USD/JPY Japan 102.54-56 102.57-61 -0.04 102.63 102.52 -2.62

EUR/USD Euro 1.3367-68 1.3375-78 -0.06 1.3376 1.3362 -2.74

GBP/USD U.K. 1.6867-70 1.6884-87 -0.10 1.6886 1.6870 +1.88

USD/CHF Switzerland 0.9095-97 0.9089-93 +0.05 0.9100 0.9092 +1.85

USD/CAD Canada 1.0966-70 1.0959-64 +0.06 1.0966 1.0958 +3.26

AUD/USD Australia 0.9300-04 0.9303-06 -0.03 0.9307 0.9293 +4.34

NZD/USD New Zealand 0.8434-36 0.8466-70 -0.39 0.8469 0.8424 +2.60

Euro Rate

EUR/JPY Japan 137.08-10 137.21-25 -0.10 137.23 137.06 -5.28

Source: ICAP PLC

Write to Tatsuo Ito at tatsuo.ito@wsj.com

(END) Dow Jones Newswires

August 06, 2014 02:21 ET (06:21 GMT)

Copyright (c) 2014 Dow Jones & Company, Inc.