* Swiss franc <CHF=> rises to record high vs dlr at 0.9238
* Mid-East tension fuels safe haven demand, oil prices surge
* Euro rises versus dollar, ECB better placed for oil rise
(Adds quote, detail, updates prices)
By Naomi Tajitsu
LONDON, Feb 24 (Reuters) - The Swiss franc hit a record high
against the dollar on Thursday, boosted by safe-haven demand due
to ongoing political turmoil in Libya, while the resulting surge
in oil prices stung the U.S. currency across the board.
Brent crude oil <LCOc1> leapt to its highest since August
2008 on concern that unrest that has cut more than a quarter of
OPEC-member Libya's output could spread to other producers
including top exporter Saudi Arabia. []
Worries over Libya, following recent uprisings in Tunisia
and Egypt, helped the Swiss franc and to a lesser extent the
yen, currencies that traders often buy at a time of uncertainty.
While the dollar in the past has also benefited from the
risk aversion trade, the U.S. currency has come under selling
pressure on concerns the U.S. economy is the most vulnerable to
higher oil prices at the moment.
"The nature of the crisis is dollar negative. It raises oil
costs and the U.S. is a big importer of oil, it hits household
wealth and productivity and growth more than anywhere else,"
said Peter Frank, currency strategist at Societe Generale.
He added that such concerns would overshadow the safe-haven
status of the world's largest reserve currency so long as
instability in the Middle East and North Africa remains an oil
supply issue and does not morph into a bigger, global problem.
Analysts said the rise in oil prices would be positive for
commodity-linked currencies including the Australian and
Canadian dollars and the Norwegian crown, all three of which
rose versus the U.S. currency on Thursday.
Many said safe-haven demand for yen would likely dwindle as
investors address the impact of rising oil prices on Japan,
which imports the vast majority of its oil supply.
The dollar fell to a record low of 0.9240 Swiss franc <CHF=>
on electronic trading platform EBS, its slide having intensified
after triggering stop-loss selling below its previous record low
of 0.9301 set at the end of last year.
Technical analysts said the U.S. currency's break below
0.9309 franc, around major trendline support drawn from lows hit
in 1995 and 2008, had opened the way to more losses.
One-month implied dollar/Swiss volatility continued to pick
up, trading around 11.70 percent <CHF1MO=>, but this was still
well below levels of around 15 percent seen around the start of
the euro zone debt crisis in April 2010.
The euro slid to around 1.2703 francs according to Reuters
data, its lowest since Jan 13, before pulling back to 1.2739,
down 0.7 percent on the day. It fell 0.7 percent to 112.54 yen
<EURJPY=R>
The yen rose broadly, pushing the dollar 0.8 percent lower
to 81.83 yen. Traders cited dollar selling by Japanese exporters
and model funds, as well as some liquidation of long dollar
positions established since the beginning of the year.
INFLATION, RATES
The euro <EUR=> was slightly higher on the day against the
dollar at $1.3760, staying supported on recent hawkish comments
on inflation by European Central Bank officials which raised
expectations the ECB may begin seriously considering an exit
strategy from ultra-low rates, paving the way for tighter
monetary policy.
Some analysts said anticipation that an Irish general
election on Friday may result in a stable coalition government
also supported the euro as it would ease near-term worries about
political stability in debt-plagued euro zone countries.
The dollar index <.DXY> fell to its lowest in three weeks at
77.011, down 0.4 percent on the day.
Higher oil prices come at a time when the Federal Reserve is
resisting raising rates in the face of rising inflation risks,
and is widely expected to lag far behind the ECB and the Bank of
England in monetary tightening.
Analysts said this view would continue to knock the dollar.
"It is important to remember weak growth does less damage to
a currency than inflation which is not fought sufficiently by a
central bank. In this respect the euro seems more attractive
than the dollar, as the Fed is still sticking to its QE2
programme," said fx analysts at Commerzbank in a note.
(Additional reporting by Neal Armstrong; editing by Stephen
Nisbet)
