By Dion Rabouin
NEW YORK (Reuters) - The dollar rose by more than 1 percent against the yen on Monday, nearing a three-week high, as investors unwound a surge of safe-haven trades made on the back of an attempted military coup in Turkey.
Turkey purged its police on Monday after rounding up thousands of soldiers in the wake of the unsuccessful coup over the weekend, with the government saying it was in control of the country and economy.
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That eased concerns about the prospect of another major round of turmoil to add to Europe's economic and political problems, drawing investors back into higher-risk currencies and out of the traditional security of the yen.
Turkey's currency, the lira, also reversed earlier selling and rose by as much as 3 percent against the dollar, moving from three-month lows touched after news of the coup attempt broke on Friday.
The lira <TRYTOM=D3> was last up 1.75 percent against the dollar to 2.9660 lira.
"I think the big theme today is one of relief," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. The appetite for risk showed that "Turkish authorities have managed to offer up enough support for the markets so that people are not showing that much concern."
Borthwick also pointed to improved market sentiment regarding the political situation in the United Kingdom since Theresa May became prime minister last week.
The British pound was bolstered after Bank of England policymaker Martin Weale said there was no urgent need to cut interest rates and pointed to problems with both more cuts and any further quantitative easing.
Sterling <GBP=> rose 0.55 percent against the dollar to $1.3265. Sterling rose nearly 2 percent last week for its best week against the greenback since early March.
The relief rally and the reversal of pre-Brexit trades boosted both the dollar and pound against the yen.
The pound has gained 9 percent against the yen in the past 8 days <GBPJPY=>, while the dollar is up nearly 5 percent <JPY=>.
On Monday, the dollar was up 1.15 percent against the yen, rising to 106.05 yen.
The yen also has been under pressure since reports that discussion had begun about the possibility of the Bank of Japan directly funding an increase in government spending known as "helicopter money."
The euro <EUR=> rose 0.3 percent against the dollar to $1.1067.
The dollar index<.DXY>, which tracks the dollar against six major world currencies, was little moved at 96.560.
(Reporting by Dion Rabouin; Editing by Diane Craft)