Dollar gains sharply as N Korea announces nuclear test

Singapore (Antara News) - The dollar rose sharply against the yen and other currencies Monday as investors sought a traditional safe-haven following North Korea's announcement of its first nuclear test.

The dollar was at 119.28 yen in afternoon trade, still higher but falling back from 119.96 yen seen shortly after Pyongyang's official Korean Central News Agency announced the test.

Late Friday in New York, the dollar was at 118.98, a seven-month high against the yen, AFP reported.

The euro was relatively steady against the dollar, at 1.2599 against 1.2598 dollars in late New York trade Friday, when the unit rose to its best level since July against the single European currency.

Tokyo's markets were closed for a public holiday, limiting the impact of the news in the region.

The South Korean won was down sharply against the dollar, falling to 964 in afternoon trade from around 949 on Friday.

"The Korean won and the yen are the two most liquid ways of reducing the risk," said Callum Henderson, head of forex strategy at Standard Chartered.

"There has been a knee-jerk reaction. Will it last over and beyond the next couple of days? Probably not," he said, adding the market will focus on reaction at the United Nations Security Council.

The White House has called on the UN Security Council to take action in light of North Korea's move.

Henderson said he would not expect the yen to fall below 120.

Thomas Lam, treasury economist with United Overseas Bank Group in Singapore, said the market was reacting to the uncertainty surrounding North Korea's announcement.

Some players with long (buy) positions might be taking precautionary profits, he said, noting that the dollar had broken through the 119 level last Friday anyway.

"The technical bias has definitely shifted to the upside," Lam said.

He added that the market was relatively quiet Monday with Japan closed, a factor that may have exaggerated volatility.

"The most at risk is probably the dollar-yen," Lam said.

Geopolitical news was expected to hold the market's attention at the start of the week pending the release of US trade and retail sales figures on Thursday and Friday.

The dollar rose to 9,227 Indonesian rupiah from 9,205.5 on Friday, to 50.130 Philippine pesos from 50.005 and to 1.5904 Singapore dollars from 1.5854.

It fell to 37.5850 Thai baht from 37.610 and to 33.085 Taiwan dollars from 33.090. (*)
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