TOKYO: The yen lost ground in Asian trading Wednesday in the wake of North Korea launching a rocket seen by many in the international community as a disguised ballistic missile test.
The greenback bought 82.67 yen in Tokyo trade from 82.51 yen in New York late Tuesday, while it was nearly flat on the euro at $1.3002 from $1.3003.
The euro also gained on the Japanese currency at 107.48 yen from 107.28 yen, buoyed by a surge in German investor sentiment to a seven-month high.
A successful Spanish debt auction that saw Madrid's borrowing costs drop sharply also supported the single currency.
Currency markets largely shrugged off the launch, condemned by the international community as a threat to regional stability, while Asian stock markets were also little affected by the news from North Korea.
The launch comes as Japan prepares to hold weekend elections widely expected to see Prime Minister Yoshihiko Noda's government toppled by main opposition leader Shinzo Abe and his Liberal Democratic Party.
The yen has been weakening on speculation that Abe would follow through on vows to pressure the Bank of Japan into launching more aggressive easing measures to boost the world's third-largest economy.
"What we are waiting for is Japan's election, and what we want to know is how many seats the Liberal Democratic Party can secure," Hiroshi Maeba, a forex trader in Tokyo, told Dow Jones Newswires.
Markets were also eyeing the conclusion of the US Federal Reserve's policy meeting later Wednesday, with traders betting that the central bank would launch further easing, which tends to weigh on the dollar.
The US fiscal cliff budgetary impasse was also in focus with US President Barack Obama and his Republican foes swapping offers in a bid to avert the package of tax hikes and spending cuts due to come into effect on January 1.
There are widespread fears the package would drag the world's biggest economy into a recession unless a new spending deal is reached.
The dollar was mostly lower against other Asia-Pacific currencies.
It eased to 1,075.30 South Korean won from 1,077.25 won on Tuesday, to 54.24 Indian rupees from 54.32 rupees, to Sg$1.2212 from Sg$1.2222, and to 30.60 Thai baht from 30.64 baht.
The greenback also fell to 9,700 Indonesia rupiah from 9,714 rupiah and to Tw$29.07 from Tw$29.08.
The dollar rose to 40.99 Philippine pesos from 40.93 pesos.
The Australian dollar firmed to US$1.0526 from US$1.0482 while China's yuan edged up to 13.22 yen from 13.18 yen.
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