diff --git a/frontend/lexer_def.py b/frontend/lexer_def.py
index 058e6f2357..daaa5f8f33 100644
--- a/frontend/lexer_def.py
+++ b/frontend/lexer_def.py
@@ -434,6 +434,8 @@ def IsKeyword(name):
 LEXER_DEF[lex_mode_e.VSub_ArgDQ] = \
   _DQ_BACKSLASH +  _VS_ARG_COMMON + _LEFT_SUBS + _VARS + [
 
+  C(r'\}', Id.Lit_EscapedChar),  # For "${var-\}}"
+
   R(r'[^$`/}"\0\\#%]+', Id.Lit_Chars),  # matches a line at most
 
   # Weird wart: even in double quoted state, double quotes are allowed
diff --git a/spec/var-sub-quote.test.sh b/spec/var-sub-quote.test.sh
index 4523683084..539f9e27e4 100644
--- a/spec/var-sub-quote.test.sh
+++ b/spec/var-sub-quote.test.sh
@@ -261,3 +261,30 @@ echo "${unset:-'a'}"
 a
 'a'
 ## END
+
+
+#### Right Brace as argument (similar to #702)
+
+echo "${var-}}"
+echo "${var-\}}"
+echo "${var-'}'}"
+echo "${var-"}"}"
+## STDOUT:
+}
+}
+''}
+}
+## END
+## BUG bash STDOUT:
+}
+}
+'}'
+}
+## END
+## BUG yash STDOUT:
+}
+}
+}
+}
+## END
+