(MENAFN- AFP) The euro sank almost two percent against the Swiss franc Friday and Asian markets tumbled as traders were left stunned by Switzerland's shock decision to remove its currency peg to the euro.
Oil edged up slightly, meanwhile, after plunging Thursday in reaction to OPEC's announcement that it produced more than its limit of the black gold in December, despite weak demand, low prices and a supply glut.
Global markets were stunned Thursday when the Swiss National Bank said it would scrap its 1.20 franc peg to the euro, which had been in place since the height of the European debt crisis three years ago.
The news immediately sent the Swiss currency surging 30 percent to 0.8517 at one point before ending the day at 1.0035. In Asian trade, it rose again, sitting at 0.9945 in early trade.
It also led already nervous dealers scurrying for safer investments, particularly the Japanese yen.
While the dollar edged up to 116.32 yen early Friday from 116.25 yen late in New York, it is still well off the 117.70 yen seen in Tokyo earlier Thursday.
The European common currency fetched $1.1618 and 135.21 yen, compared with $1.1623 and 135.12 yen in US trade. That compares with $1.1773 and 138.64 yen Thursday before the SNB move.
Adding downward 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.
Equities markets took a hit with Tokyo sinking 2.81 percent as exporters were hurt by the stronger yen, while Hong Kong lost 0.63 percent, Sydney shed 0.52 percent and Seoul tumbled 1.02 percent.
However, Shanghai climbed 0.86 percent, adding to the more than three percent gain Thursday, as investors bet on the government unveiling new economy-boosting measures.
"The SNB caught almost everyone by surprise and it's creating unease and anxiety in markets," Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors, told Bloomberg News. "The strategy is capital preservation for now, buying gold to hedge against the volatility which is going to continue."
Bullion rose to $1,260.03 an ounce Friday from $1,246.19 late Thursday.
Oil prices ticked up following another sell-off Thursday that came in reaction to OPEC's announcement.
US benchmark West Texas Intermediate for February, which plunged $2.23 Thursday, rose 28 cents to $43.53.
Brent North Sea crude for March was up eight cents at $48.35. The February contract for Brent fell $1.02 Thursday, its last day of trading.
The 12-nation cartel, which produces about one third of global supplies, said in a monthly report Thursday that its production rose to 30.2 million barrels a day in December, above the cartel's 30 million output limit.
It also projected that demand for its oil would fall to 28.8 million barrels per day this year from 29.1 million in 2014.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.