The Swiss franc fell from record highs on Wednesday after the Swiss National Bank shocked the market with an interest rate cut, but the retreat should prove fleeting given mounting concerns about global growth.

The SNB said the franc was "massively overvalued," keeping alive the prospect of intervention. For details, see [ID:nL6E7J30C0]

That sharpened the focus on Japanese monetary authorities, who warned again they were uncomfortable with the rising yen [ID:nL3E7J24NW]

The safe-haven franc has repeatedly hit record highs against the dollar and euro in recent sessions after weak manufacturing data stoked fears of a global economic slowdown. Concerns about fiscal health in the United States and Europe added to the allure of the Swiss currency.

"I am skeptical that the SNB actions will have more than a transitory 'psychological' negative impact on the Swissie if we remain in a risk-averse world," said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York.

"With the U.S. dollar not playing its traditional role as flight-to-quality vehicle, the flight from a wide array of risky assets is being funneled and concentrated into very few alternatives," he said. "In the world of fiat currency, the list of risk-aversion beneficiaries includes only one currency, the Swissie."

The euro had hit a record low of 1.07946 francs EURCHF=EBS on trading platform EBS just before the SNB's move. It then rebounded sharply to last trade 1.6 percent higher at 1.1007.

The dollar also recovered from a record low of 0.7610 franc CHF=EBS, last trading at 0.7685, up 0.7 percent on the day.

Analysts said the SNB will be wary of intervention to weaken the franc, having spent nearly $21 billion trying to check the currency's gains between March 2009 and June 2010.

"The SNB will be reluctant to intervene in the currency markets again after their intervention at 1.50 francs, which was perceived as being unsuccessful," said Adrian Schmidt, currency strategist at Lloyds Banking Group

Deutsche Bank Manufacturing New York Deutsche Bank