TOKYO: The euro was struggling on Friday in Asia after plunging in reaction to Switzerland's surprise decision to remove its currency peg against the unit, sending investors fleeing for safer currencies.
Markets were blindsided Thursday when the Swiss National Bank said it would scrap its 1.20 franc link to the euro, which had been in place since the height of the European debt crisis three years ago.
The SNB had been defending the exchange rate since September 2011 in an effort to protect the country's vital export and tourism industries, even buying massive quantities of foreign currencies to do so.
More recently, the Russian ruble crisis put renewed pressure on the franc.
The news immediately sent the Swiss currency surging 30 percent to 0.8517 at one point Thursday before ending the day at 1.0035 against the euro.
In Tokyo on Friday, the franc rose again to 0.9945 against the euro before settling back at 1.0017 by midday.
The announcement also sent the US dollar falling to 0.8597 against the franc from 1.0193. By midday in Tokyo, the greenback recovered slightly to 0.8632.
"It's normal for (Russian) ruble to do this kind of thing, but we're talking about Swiss franc," Axel Merk, president and founder of US-based Merk Investments, told Bloomberg News.
"That's quite extraordinary and unheard of."
In Asia, the yen -- seen as a safe bet in times of turmoil or uncertainty -- picked up pace. The dollar fell to 115.96 yen from 116.25 yen in New York and well down from 117.70 yen in Tokyo earlier Thursday.
"With the SNB's policy shift, the euro slid and the franc surged, creating a spike in volatility and that's led to a risk-off trade," said Kengo Suzuki, chief currency strategist at Mizuho Securities.
"Yen's being bought amid this risk-off mood."
The euro edged up to $1.1644 and 135.25 yen, against $1.1623 and 135.12 yen. But it is well down from $1.1773 and 138.64 yen Thursday before the SNB move.
International Monetary Fund chief Christine Lagarde called the move in a CNBC television interview "a bit of a surprise", and said that she had not been informed in advance of the Swiss decision.
"I would hope that it was communicated with other colleagues of central banks. I'm not sure it was," she said.
Adding to pressure on the euro is the growing expectation the European Central Bank will unveil a vast bond-buying scheme next week aimed at kickstarting growth and avoiding deflation.
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