The US dollar lost ground against the yen in Asian trade on Monday, hit by reports of a nuclear test by North Korea and concerns over worsening US public finances, dealers said.
The US currency fell to 94.45 yen ($1.45) in Tokyo early afternoon trade, down from 94.78 in New York late Friday. The euro edged to US$1.3991 ($2.03) compared with 1.3995 and to 132.45 yen from 132.64.
The US dollar extended its losses against the yen as North Korea's announcement that it had staged a "successful" nuclear test prompted renewed demand for safe-haven currencies.
"Global markets shifted into risk aversion mode following the reports (of the nuclear test) with most currencies giving up some gains against the US dollar," said Societe Generale analyst Patrick Bennett.
The greenback rose to 1,261.80 South Korean on Monday, up from 1,246.95 in late Asian trade on Friday, as South Korean stocks slumped.
The euro eased back as Pyongyang's announcement dampened the market's appetite for riskier investments, dealers said.
On Friday the European currency had jumped above US$1.40 for the first time since January 2 as fears about a possible downgrade of US credit ratings gripped the markets.
"Continuing increases in US bond yields and a rising price of gold signalled a growing aversion to the greenback linked to concern that the US may lose its AAA credit rating," NAB Capital strategists wrote in a note.
Such worries mounted after credit ratings agency Standard & Poor's last week downgraded its outlook for Britain's sovereign debt.
Last Friday Moody's said that while its own top "AAA" rating on the United States was stable it was "not guaranteed forever."
Traders were waiting for US housing data and gross domestic product figures for the first quarter due this week for clues on the economic outlook.
But trade was relatively thin, with markets in the United States and Britain closed Monday for public holidays.
