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Yen, Swiss franc gain as risk rally fades

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Dan Kitwood | Getty Images

The yen and Swiss franc rallied across the board on Tuesday as a recent rebound in stocks and crude oil faded, reviving demand for both safe-haven currencies.

The Japanese currency climbed to a two-week peak against the dollar, while the Swiss franc rose to a three-week high, eliciting demand as U.S. crude futures slumped nearly five percent on the day, and Wall Street shares traded lower.

Comments from Bank of Japan Governor Haruhiko Kuroda on Tuesday also helped the yen's cause. Kuroda said accelerating the pace of money printing alone would not boost expectations of future price rises and acknowledged the limits of what monetary policy can do to revive growth.

"The combination of comments from Kuroda and broader market moves are helping support the yen and that's why it's stronger," said Eric Viloria, currency strategist at Wells Fargo in New York.

Earlier, sentiment for riskier assets was also hurt by China's decision to set a softer mid-point for the yuan , although most traders expect it to remain steady before a meeting of G20 finance ministers and central bankers in Shanghai later this week.

A senior U.S. Treasury official told reporters on Monday that the G-20 meeting in Shanghai would reiterate the importance of commitment to avoiding forex rate misalignments.

The dollar fell 0.74 percent to 112.05, dropping as low as 111.78 yen, the lowest since Feb. 11. The euro, meanwhile, touched 123.13 yen, its lowest since April 2013. It was last at 123.38 down 0.87 percent.

The safe-haven Swiss franc was also well-bid, pushing the dollar 0.73 percent lower to 0.9919 franc, and the euro down 0.93 percent at 1.0924 francs.

Europe's shared currency earlier fell to a one-month high against the franc, helped in part by comments from Swiss National Bank President Thomas Jordan, who said there was a limit to how low interest rates could go.

The euro was little changed against the dollar, falling below $1.10 for the first time in three weeks, after a key index on German business climate fell sharply, raising worries about Europe's largest economy. It last traded at $1.1013.

In Europe, the focus was on the battered sterling. The pound was down 0.94 percent at $1.4013. It fell nearly 2 percent on Monday, its biggest one-day drop in almost six years.