The US currency came under renewed selling pressure after finance ministers and central bank governors from the Group of Seven (G7) -- Britain, Canada, France, Germany, Italy, Japan and the United States -- called for "more flexibility in exchange rates" following a meeting a week ago.

Market participants interpreted the line in the G7 communique as an implicit but strong message from Washington that it wants its trade partners that maintain chronic surpluses -- namely China and Japan -- to let their currencies appreciate against the dollar to trim their export competitiveness.

But many currency market watchers and economists interviewed by AFP said there has been no drastic shift in dollar policy agreed upon by the world's richest democracies.

"I'm not sure if there is a G7 policy. From the interpretations of the statement, there is now disagreement about the desired outcome," said Richard Jerram, economist at ING Financial Markets in Tokyo.

Japanese Finance Minister Sadakazu Tanigaki told reporters on Friday that the recent rise in the yen was too rapid and suggested that Tokyo would continue to intervene in the currency market as it had in the past.

Washington cannot explicitly say that it wants a weaker dollar because it needs to attract foreign capital inflows to fund its current account deficit, Jerram and other economists point out.

"Making an outright policy change would simply risk an avalanche of selling (of US dollars)," Marshall Gittler, currency strategist at Deutsche Bank in Tokyo, wrote in a commentary.

The authorities want to keep the markets guessing about their intentions and be cautious about selling dollars, he said.

Song Seng Wun, a regional economist with GK Goh Research in Singapore, said he did not think the G7 statement marked a turning point for the dollar and Asian currencies.