The yen touched a three-month high against the euro after the Swiss National Bank roiled markets with its decision to abandon the franc’s cap, knocking down what an official earlier this week reaffirmed as a pillar of policy.
Japan’s currency was set for its biggest weekly gain since the shared currency’s 1999 debut, after the euro tumbled as much as 1.9 percent against the dollar on Thursday. The franc surged as much as 38 percent versus the greenback and gained against all of the more than 150 currencies tracked by Bloomberg. Volatility jumped to a more than one-year high. The SNB’s move to further lower rates that were already below zero boosted demand for higher-yielding U.S. debt.
“The Swiss decision has pushed U.S. yields lower and that’s pushing dollar-yen down gradually,” said Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Many central banks are doing their own thing and that’s feeding uncertainties and will probably lead to risk aversion in markets such as stocks.”
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