TOKYO, Dec 19 – The dollar rose against other currencies on Monday following news that North Korean leader Kim Jong-Il had died, which sparked worries over instability in the reclusive state.
The greenback gained ground as market players digested the announcement from North Korean state television that the 69-year-old had died on Saturday.
The dollar bought 77.93 yen in Tokyo afternoon trade, up from 77.81 yen in New York late Friday. The euro fell to $1.3005 from $1.3032, and to 101.37 yen from 101.45 yen.
The South Korean won tumbled to 1,173.40 to the dollar from 1,156.90 on Friday.
“The first reaction was to buy the dollar while selling the euro, the South Korean won and Asian shares,” said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.
“But there is great uncertainty about what is going to happen next. People can’t take further action in the absence of more news,” she told Dow Jones Newswires.
Market players are concerned his son and likely successor Kim Jong-Un, who is in his late 20s, is “too young” and “inheriting a very difficult situation,” which could lead to instability in relations with China and Japan, said a senior dealer at a bank in Singapore.
The euro also remained pressured due to concerns about possible downgrades to European sovereign debt.
“As long as downgrade concerns linger, I don’t want to buy euros,” said Yoshio Yoshida, a trader at Mizuho Trust and Banking.
Traders were unmoved by the news that European finance ministers would hold a conference call later in the day.
“We can’t expect much, or even something more positive for the euro from the meeting,” a senior dealer at a major bank in Tokyo said.
The only plausible euro-positive factor would be the European Central Bank buying more Italian bonds, but that is not likely to happen for the time being. “The euro has only one way to go: down,” he said.
Eurozone finance ministers will hold talks to flesh out euro-saving plans made at a Brussels summit this month.
With several bloc members facing the threat of downgrades, a key focus of the telephone conference will be boosting International Monetary Fund (IMF) coffers to enable it to come to the aid of troubled economies.
At the recent summit, which saw Britain block moves for an EU treaty change to save the currency, member countries announced a plan to pump 200 billion euros ($260 billion) into an IMF warchest.
The dollar was largely higher against other Asian currencies, gaining to Sg$1.3075 from Sg$1.3029 Friday, to 9,070.00 Indonesian rupiah from 9,046.25, to 44.04 Philippine pesos from 43.88, and to Tw$30.38 from Tw$30.34.
But the greenback eased to 31.30 Thai baht from 31.35.
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