Hot Now: Dollar weakens

TOKYO/SINGAPORE: The dollar hit a four-month low against the yen on Tuesday after North Korea fired a missile that passed over northern Japan, the latest act of provocation by Pyongyang that has ramped up global tensions.

The dollar was down 0.4 percent at 108.81 yen, having slid to as low as 108.33 yen in early Asian trade on Tuesday, its lowest level since mid-April. A risk-averse mood prevailed in the region following the missile launch, with Japan´s Nikkei stock index falling to its lowest level in nearly four months.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world´s biggest creditor nation and has a current account surplus. There is also an assumption that Japanese investors might eventually repatriate funds if market turmoil persists and dampens their risk appetite. North Korea fired a missile early on Tuesday that flew over Japan and landed in waters off Hokkaido, in a sharp escalation of tensions on the Korean peninsula. "Based on past patterns in which the yen has gained on such incidences, speculators reacted immediately to the North Korean missile headlines, taking dollar/yen to the intraday lows," said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.