Source: The Wall Street Journal Asia                         Date: 03 December, 2010

The U.S. dollar is recapturing its role as the primary safe-haven currency, eclipsing the yen and the Swiss franc, as tensions in Korea and Europe escalate. That re-emergence as the ultimate sanctuary for those fleeing risk will likely result in continued strength, analysts expect.

Turmoil will remain a dominant factor in coming sessions as investors confront three key sources of stress: the rolling sovereign-debt crisis in Europe, the escalating military confrontation in Korea and the fear of further policy tightening in China. Japan's proximity to Korea, which undermines the perceived safety of the yen, is clearly buttressing the dollar's safe-haven status. But beyond the specifics of this multipronged retreat from risk is the dollar's unique position as the "home" currency for global investors. As the flight from risk intensifies, the more investors will push aside other issues and seek out the perceived safety and liquidity of U.S.-dollar assets.