The dollar fell in Asia on Tuesday as the United States lurched into its first government shutdown in 17 years due to a budget standoff.

The greenback bought 98.16 yen in Tokyo afternoon trade after U.S. lawmakers missed a midnight deadline to avert the shutdown, down from highs of around 98.70 in morning trade and 98.21 yen in New York on Monday afternoon.

The US government shutdown early Tuesday triggered agency closures and hundreds of thousands of furloughs as Congress missed a deadline to pass a budget.

"The economic impact (of the shutdown) is unclear. That's why investors are holding off on their trading," said Kosuke Hanao, head of foreign exchange at HSBC in Japan.

Earlier in the day the Bank of Japan's quarterly Tankan business confidence survey hit its highest level in over five years.

That was followed by Japan's Prime Minister Shinzo Abe saying he would press on with a sales tax rise seen as crucial to shrinking a huge national debt.

Later Tuesday the 59-year-old leader is expected to spell out details of an economic stimulus plan aimed at softening the impact of raising the tax burden. A corporate tax cut may be part of the package.

"If that doesn't impress us, the yen is likely to strengthen on the back of the US problems," Akira Moroga, manager of forex products group at Aozora Bank, told Dow Jones Newswires.

In other trading, the euro edged up despite a political row in Italy that threatens the future of the country's young government. The single currency fetched $1.3547 and 132.93 yen compared with $1.3524 and 132.81 yen in US trade.

Italian Prime Minister Enrico Letta is battling to save his coalition from collapse after former premier Silvio Berlusconi said he was pulling his party's ministers out of the cabinet. Letta is due to go to parliament on Wednesday for a confidence vote in his government, which was formed barely five months ago.

The dollar was mostly lower against other Asia-Pacific currencies.

It slipped to 62.35 Indian rupees from 62.78 rupees the previous day, to Sg$1.2531 from Sg$1.2570, to 31.21 Thai baht from 31.39 baht, to 43.31 Philippine pesos from 43.53 pesos, to 11,239 Indonesian rupiah from 11,655 rupiah, and to Tw$29.54 from Tw$29.56.

The greenback rose to 1,074.01 South Korean won from 1,073.88 won.

The Australian dollar strengthened to 93.86 US cents from 93.11 cents after the nation's central bank held interest rates at their record low of 2.50 percent.

The Chinese yuan changed hands at 16.01 yen from 15.97 yen.