LONDON — The yen rose against the dollar, boosted by "safe-haven" flows as prospects for the global economy dimmed in light of recent economic data and moves by governments to curb lending, dealers said.
Against the Japanese unit, the dollar slid to 90.38 yen from 90.50 yen late in New York on Thursday.
The European single currency rose to 1.4151 dollars, which compared with 1.4082 late on Thursday.
Risk appetite has receded since the end of last year because of lacklustre economic data in the United States, Europe and Japan, as well as recent signs China is moving to cool an overheating economy, dealers said.
Hopes for a sustainable global recovery declined as stocks fell in response to US President Barack Obama's proposal unveiled on Thursday to limit the size and scope of US banks and finance firms.
"Optimism for a global economic recovery is receding, prompting investors to reduce their risky positions and favoring the yen as a safe haven," said Mitsubishi UFJ Trust and Banking currency strategist Toshihiko Sakai.
Investors were waiting for more details surrounding Obama's plan, which would in effect force financial institutions to choose between commercial banking and proprietary trading.
Obama laid out a tough programme on Thursday to limit "excessive" risk-taking and "protect" US taxpayers by preventing banks or financial institutions from owning, investing in or sponsoring hedge fund or private equity funds.
"Never again will the American taxpayer be held hostage by a bank that is too big to fail," vowed Obama.
Citi analyst Michael Hart said that the Obama proposals had sparked a move away from riskier currencies.
"Following a week during which risk aversion kept on rising, sentiment reached a new trough after President Obama yesterday outlined his plans to curtail financial sector risk taking," Hart said.
On Thursday meanwhile, the euro had stuck a six-month low against the dollar as worries that China will cool its booming economy curbed demand for risk-sensitive currencies.
In London on Friday, the euro was changing hands at 1.4151 dollars against 1.4082 dollars late on Thursday, 127.90 yen (127.44), 0.8727 pounds (0.8695) and 1.4697 Swiss francs (1.4682).
The dollar stood at 90.38 yen (90.50) and 1.0386 Swiss francs (1.0423).
The pound was at 1.6214 dollars (1.6192).
On the London Bullion Market, the price of gold dipped to 1,096 dollars an ounce from 1,108.25 dollars on Thursday.
