The Japanese yen and Swiss franc, which investors view as safe places to park their money, climbed against the dollar and most of the world's currencies on Monday as concerns grew about rising debt in the U.S. and Europe amid slowing economic growth.
Ratings agency Standard & Poor's downgraded the U.S. long-term credit rating by one notch to AA+ from AAA on Friday, a move that could further undercut U.S. growth.
Meanwhile, investors are worried that the European Central Bank and European policy makers have not yet contained the Continent's debt crisis. They fear that Italy or Spain could need bailouts that would overwhelm the current emergency fund.
Seeking to avert panic spreading across financial markets, finance ministers and central bankers of the Group of 20 industrial and developing nations issued a joint statement Monday saying they were committed to taking all necessary measures to support financial stability and growth.
The yen and franc, along with gold, have become increasingly attractive to investors seeking safety. Fears of a U.S. economic slowdown and a political atmosphere that could impair the country's ability to cut its long-term debt levels have reduced the dollar's appeal.
The franc's steep climb against the dollar and euro in recent months prompted the Swiss central bank to take steps last week to curb the franc's gains. With fear motivating some investors, the move has not been as effective as hoped. The dollar hit its latest record low of 0.7481 Swiss franc on Monday. The franc is up about 25 percent against the dollar this year.
Japan also sold yen last week in an effort to stem the yen's climb.
A stronger currency makes the exports of both countries less competitive in global markets. That cuts into corporate profits when converted back into the home currency.
In afternoon trading, the dollar fell to 77.70 yen from 78.34 yen late Friday, and slid to 0.7559 Swiss franc from 0.7666 franc.
The dollar rose against most other currencies in Europe and the developing world. The dollar is the global reserve currency and gives investors access to U.S. Treasurys, still considered among the world's safest investments.
The euro dropped to $1.4196 from $1.4265. The European Central Bank purchased Spanish and Italian bonds in a bid to drive down borrowing costs of those countries and keep them from default. Bond yields retreated from recent highs Monday, helping contain the risk of a spiraling emergency in Europe. Buying the bonds however "will not address the fundamental economic and fiscal problems facing Italy and Spain," said Capital Economics economist Jonathan Loynes.
Elsewhere, the British pound dipped to $1.6353 from $1.6362.
The dollar jumped to 99.21 Canadian cents from 97.96 cents, hitting its strongest point since March, and gained to its highest level in more than four months against the Australian dollar.
Emerging-market currencies such as the South Korean won, Brazilian real and Hungarian forint all tumbled.