The dollar was up 0.3% against the Japanese currency at 116.30 yen. The euro, meanwhile, was up 0.05% at 1.3569 and the pound was up 0.5% at $2.0053.

With limited reaction to negative news and strong signals that the Federal Reserve and various banks were working together to stabilize credit markets, traders once again resumed their carry trades. In carry trades, investors borrow lower-yielding currencies like the yen to reinvest in higher-yielding assets elsewhere.

"The markets are continuing to benefit from financial-market developments including the injection of capital to the largest U.S. lender," said analysts at Brown Brothers Harriman & Co. in a note to investors. "That has helped restore a smidgeon of confidence that commercial bank actions, whether driven by leadership or opportunities, may help, together with the Fed, lead the credit markets back to a more stable environment.

Bank of America Corp. announced late Wednesday it would invest $2 billion in Countrywide Financial Corp. to help the largest U.S. mortgage lender survive the subprime crisis. See full story.

Confidence also was shored up after four of the largest U.S. banks said Wednesday that they borrowed $2 billion from the Federal Reserve as part of a new program set up last weak to ease liquidity concerns. See full story.

In Tokyo Thursday, the Bank of Japan said that it would hold its key interest rate steady at 0.5%. See full story.

Although carry trade activity rose after the announcement, the move in currencies "has been brewing for a couple days," wrote Dustin Reid, foreign-exchange analyst at ABN Amro, in a note to investors. "Failure of [subprime] news to dampen the U.S. equity market appetite indicates to me that headline shock is dissipating on this issue."