The Korean conflict causes investors to flee to dollars and Swiss franks

The dollar and the Swiss Frank yesterday gained on the foreign markets, after the artillery fire exchange between the two Korean Republics fueled demand for these safe haven currencies.

The North-Korean army yesterday fired several dozen shells on the South Korean island of Yeonpyeong, located in the Yellow Sea, killing two and wounding at least 12 other South-Korean soldiers. The shelling also wounded three civilians living on the island. South-Koreans replied with artillery fire.

Under these circumstances, the dollar rose 1%, to 1.3495/Euro at 09:07, on the New York market, from 1.3627/Euro on the previous day. The Swiss frank rose 1.1% against the Euro, to 1.3338/Euro, from 1.3484 Euro.

The Korean currency markets were closed when the shelling occurred. The South-Korean won dropped 1% against the dollar yesterday, at 1.137.46 units against the dollar.

The Chinese government expressed its concern over the situation.

In turn, Russia warned that the tensions in the Korean Peninsula should not be allowed to escalate.

Russian foreign affairs minister Sergey Lavrov has condemned the shelling of South Korean island in an official statement and called for a return to normalcy.

The White House also expressed its outrage at the shelling, and expressed its firm commitment to defend its South-Korean ally, and to maintain peace and stability in the region. The White House announced: "The United States demand that North Korea stop its provocative actions and fully abide by the terms of the armistice agreement. The US are strongly dedicated to defending their ally, the Republic of Korea".

On the other hand, according to an official of the South-Korean Ministry of Foreign Affairs, Seoul intends to notify the UN concerning the exchange which took place yesterday.

According to some analysts, the North Korean is an attempt to force President Barack Obama to change his stance on North Korea.