* China, EM worries spark selloff in risk assets
* Euro helped by strong business data, rising c/a surplus
* Swiss franc benefits from country's move to dampen housing
* As EM currencies savaged, Aussie & loonie also hit hard
* Dollar not helped by fall in U.S. bond yields
By Hideyuki Sano
TOKYO, Jan 24 The yen, Swiss franc and euro held
firm on Friday, having charged higher overnight as worries about
a slowdown in China and turmoil in some emerging markets spurred
demand for safe-haven currencies.
In the face of a nervous market, comments from a Reserve
Bank of Australia policymaker that the Australian dollar had not
fallen far enough drove the currency dollar to 3 1/2-year lows.
Thursday's weak Chinese manufacturing data rekindled
concerns of slower growth in China as Beijing seeks to curb
credit-fuelled investment and turn the economy toward
"China is, in a way, the kingpin of emerging markets. When
the Chinese economy suffers, so do a lot of emerging
currencies," said Sho Aoyama, senior market analyst at Mizuho
Securities in Tokyo.
"The other side of the coin is, when investors avoid risk,
they buy currencies backed by a current account surplus", he
added. Data published on Thursday showed the euro zone current
account surplus hit a record high in November.
The dollar fell more than 1 percent against the yen and
Swiss franc on Thursday, reaching a two-week low of 102.97 yen
and a three-week low of 0.8964 Swiss francs.
The dollar last stood at 103.18 yen, down slightly from late
U.S. levels. Against the Swiss currency, it fetched 0.8970
The Swiss franc had additional support from the Swiss
government's decision to raise banks' capital requirements for
their mortgage books to dampen Switzerland's housing market
The measure, seen as a balancing act to curb asset bubbles
while maintaining the franc's peg to the euro, suggested
Switzerland could come under more pressure to tighten its
monetary policy in the future.
The euro held at $1.3683, having jumped 1.1 percent
and rising as far as $1.3699 at one point on Thursday, a near
Helping the euro was the Markit's gauge of euro zone
business activity, which jumped to 53.2 in January from 52.1
last month, beating all forecasts in a Reuters poll of 25
economists and reaching its highest reading since mid-2011.
In contrast, the dollar nursed heavy losses after suffering
its biggest one-day fall in four months against a basket of
major currencies, undermined by a drop in U.S. benchmark yields
to a six-week low.
The dollar index was last at 80.518, having skidded
nearly 1 percent on Thursday.
A number of emerging economy currencies came under pressure,
with the Turkish lira hitting a record low against
the dollar, the South African rand slumping to a 5-1/2
year trough and the Russian rouble falling to its weakest
in nearly five years.
The currencies of Brazil, Venezuela and Mexico took a
beating as well.
This is partly because many still suspect the Federal
Reserve will continue to unwind its bond-buying stimulus at next
week's policy meeting.
That move is seen as having potential to hurt many markets
that had long-benefited from the floods of cash the Fed's huge
money-printing programme has created.
"We would be cautious of fading this risk-aversion move
given the scale of some of the losses in commodity and emerging
market currencies, and the euro may stay better supported in the
near-term as euro-funded risk positions are covered," analysts
at BNP Paribas wrote in a note to clients.
Worst-hit was the Argentinian peso, which suffered
its sharpest fall since the country's 2002 crisis as the
country's central bank gave up on defending the currency.
"The currency has been falling for most of the last couple
of years anyway so few people would have cared. But it was a
symbolic move," said Takako Masai, a manager of forex at Shinsei
Bank in Tokyo.
"We will have to see whether this risk-off trade will
subside today. If it does, then I wouldn't be too worried about
it spiralling into more sinister moves," she said.
Risk aversion hit commodity currencies as well.
The Australian dollar fell to as low as $0.8689 after
Reserve Bank of Australia board member Heather Ridout was
reported as saying the currency had not fallen enough and that
the currency at 80 U.S. cents would be a "fair deal" for the