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Dollar briefly rises to above 78 yen on reports of Kim Jong Il's death.

TOKYO, Dec. 19 Kyodo

The U.S. dollar briefly rose to above 78 yen Monday in Tokyo following reports that North Korean leader Kim Jong Il died over the weekend, as traders were prompted to seek safe-haven in the global key currency.

At 5 p.m., the dollar traded at 77.91-93 yen against 77.73-83 yen in New York and 77.88-90 yen in Tokyo at 5 p.m. Friday. It moved between 77.75 yen and 78.18 yen, changing hands most frequently at 77.89 yen.

The euro fetched $1.3008-3010 and 101.35-39 yen versus $1.3039-3049 and 101.45-55 yen in New York and $1.3019-3021 and 101.39-43 yen in Tokyo late Friday afternoon.

The dollar drew buying across the board on Kim's death reported around noon as market players fled to the U.S. currency amid growing geopolitical uncertainty in Asia, while the South Korean won was sold against major currencies, dealers said.

The U.S. currency briefly rose to as high as 78.18 yen, but shed some of its gains in the afternoon and mostly traded below 78 yen.

''The market first reacted by buying the dollar but everybody gradually regained calmness as no further information came forth,'' said Teppei Ino, analyst of global currency research at Bank of Tokyo-Mitsubishi UFJ.

''We can't say its impact on the currency market won't last any longer as it remains uncertain what's going to happen'' in North Korea, he said, adding the dollar will likely draw further buying against the yen if fears increase about future developments including the succession matter in North Korea.

The euro, meanwhile, fell below $1.30 on the heels of the reports about the North Korean leader but bounced back later on.

Traders are also paying attention to a European Union finance ministers' teleconference scheduled for later in the day amid the ongoing debt crisis, dealers said.

While the EU financial chiefs are expected to hold talks on their contribution to the International Monetary Fund, Masafumi Yamamoto, chief foreign exchange strategist at Barclays Bank, said in a note that the euro may face further downside risks if they cannot draw some conclusions about the loans.

But a senior dealer at a Japanese bank said the outcome of the teleconference would not provide any impetus to the currency market, noting that a fair amount of the single currency has already been sold toward the year-end.
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Publication:Japan Weekly Monitor
Date:Dec 19, 2011
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