The Swiss franc hovered near record highs and the yen rose on a sharp fall in risk sentiment on Friday as concerns over global growth and eurozone debt contagion kept safe-haven currencies in demand in volatile trade. Stock markets around the world were jittery after heavy losses in early European trade, with market players fretting over the threat of another recession in the United States and policymakers' inability to stem the spread of the eurozone's debt crisis.
Investors sought refuge in gold while the franc slipped a touch in European dealing, but markets were readying for further strength in the currency while remaining on alert for any signs of intervention from the Swiss National Bank. "If risk aversion intensifies euro/Swiss could approach parity and then we will likely see intervention. But given market conditions there's reluctance from the SNB to come in," said Derek Halpenny, head of global currency research at Bank of Tokyo-Mitsubishi UFJ.
"We are pretty much in global financial crisis mode. It's a very dangerous time." The franc rose to a record high against the euro of 1.0710 francs in early Asian trade but retreated to 1.0859 in European dealing on fears of official action to weaken the currency after comments from Swiss National Bank Chairman Phillip Hildebrand.
He was quoted as saying the SNB would not accept a further appreciation in the franc without acting, having already cut interest rates this week in an attempt to stem the currency's strength. Both the euro and dollar spiked against the Swiss franc at one point in European trade, igniting speculation the central bank was intervening. But traders reported no sightings of the SNB in currency markets so far.
The dollar was last up 0.25 percent against the franc to 0.7668 after hitting a session high of 0.7740 but remained within sight of a record low of 0.7610 hit on Wednesday. The yen retraced some of Thursday's heavy losses when massive selling intervention from the Bank of Japan pushed it sharply lower against the dollar, but further official action was expected.
Japanese Finance Minister Yoshihiko Noda said he was closely watching yen moves on Friday, signalling a readiness to continue selling the currency. A brief spike in the dollar against the yen from around 78.50 yen to an intraday high near 79.40 yen in Asia stirred talk of more intervention, which proved to be unfounded. The dollar later dipped to trade down 0.8 percent on the day at 78.42 yen . The euro was down around 0.5 percent at 111.10 yen, having risen above 114 yen the previous day. Support for the dollar was at 78.27 yen, a 50 percent retracement of the dollar's rise from its four-month low of 76.29 to Thursday's high of around 80.25 yen.
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