By Ambar Warrick

Investing.com — The Japanese yen led gains across Asian currencies on Tuesday, while the dollar retreated as traders grew less concerned over an imminent banking crisis and pivoted into more risk-driven assets.

The surged 0.8% to 130.58 against the dollar, sharply reversing overnight losses. The currency, which usually acts as a safe haven, was also seen benefiting from some consolidation of overseas profits by Japanese firms ahead of the end of Japan’s financial year on Friday.

An uptick in Japanese business-to-business services inflation also showed that underlying price pressures remained high in the country, which could invite eventual policy tightening by the Bank of Japan this year.

Other risk-driven currencies advanced on Tuesday, with the and up 0.5% and 0.4%, respectively, while the surged 0.6%. The Australian dollar was also aided by slightly stronger-than-expected data, which pointed to some resilience in the economy.

The lagged its peers, rising only 0.1% after a slightly weaker midpoint fix by the People’s Bank. Focus this week is also on Chinese data to gauge the state of an economic recovery in the country.

On the other hand, the dollar retreated further against a basket of currencies in Asian trade, as safe haven demand for the greenback waned amid easing concerns of a banking crisis. The and fell about 0.2% each on Tuesday.

Investors grew less wary of a U.S. banking crisis after the government-brokered takeover of collapsed lender Silicon Valley Bank by peer First Citizens BancShares Inc (NASDAQ:). A slew of reassurances from U.S. regulators on the stability of the banking system, as well as promises of more liquidity support also helped improve sentiment.

Fears of a banking crisis had driven heavy outflows from Asian markets through March, as investors dumped risk-heavy assets. But regional markets could now see a strong rebound as sentiment improves.

Still, any upside in Asian currencies is expected to be limited, given that are likely to increase further. A deterioration in economic growth towards the end of the year also stands to dent sentiment.

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