Yen tumbled to a two-week low against the dollar on Friday, as a powerful earthquake measuring 8.9 magnitude on Richter scale hit off Japan.

The dollar climbed to as high as around 83.29 yen from around 82.80 yen on news of the quake. The euro rose 0.4 percent against the yen to 114.84 yen.

Japan has also issued a serious tsunami warning, expecting waves of 20ft high to hit the Miyagi prefecture.

The Swiss franc declined against dollar and euro due to the quake in Japan. The Franc fell 0.4 pct against euro to 1.2908 while it fell 0.1pct against dollar to 0.9325.

However, the euro is recovering slowly against the dollar, as traders remain cautious to bet on either side ahead the European Union (EU) summit today. Heads of all member countries of eurozone will meet today to lay down the groundwork towards establishing a permanent European Stability Mechanism (ESM). ESM is set to replace the current European Financial Stability Facility (EFSF) which expires in 2013. It is also expected to double the capacity of the EFSF, from current 440 billion euros.

Euro was sold earlier this week as sovereign debt concerns resurfaced after Moody’s downgraded the debt of Greece and Spain.

However, the downside for the common currency remains limited so far, supported by a strong expectation of rate hike in April by the European Central Bank (ECB).