By Bo Nielsen Jan. 29 (Bloomberg) -- The Swiss franc rose to the highest level since March against the euro as a report showed the nation’s leading indicators rose in January for a ninth month, signaling the economic recovery is gathering pace. The Swiss currency also climbed versus the dollar. The KOF’s monthly aggregate of indicators, which aims to predict the economy’s direction six months ahead, increased to 1.77 from a revised 1.73 in December, the Zurich-based institute said today. That’s the highest since December 2007 and exceeded the 1.71 median forecast of 12 economists surveyed by Bloomberg News. “The strength of the Swiss economy is the motivation for authorities to allow further gradual franc appreciation,” Credit Suisse Group AG analysts led by London-based Sean Shepley wrote in a research note today. “Above-potential growth is more important for policy in Switzerland than in most of the rest of the G-10 because the Swiss output gap is much smaller, and in particular, Swiss employment is already back above its pre- crisis high.” The franc rose 0.2 percent to 1.4664 per euro as of 12:12 p.m. in Zurich, and strengthened to 1.4646, the most since March 10. The Swiss currency appreciated 0.4 percent in the week and 1.1 percent since the end of December. The franc climbed 0.2 percent to 1.0505 per dollar, trimming a decline this week to 0.9 percent. Higher Forecast Credit Suisse boosted its three-month forecast for the franc to 1.44 per euro, from a prior estimate of 1.47. “The Swiss government seems more comfortable with franc appreciation than even our bullish forecasts have assumed,” Shepley wrote in a research note yesterday. The Swiss central bank began intervening to weaken the franc in March to ward off deflation and revive the economy. Switzerland returned to growth in the third quarter, helped by exports and company investment. Manufacturing expanded for a fifth month in December. Investor confidence rose in January, the ZEW Center for European Economic Research and Credit Suisse Group AG said on Jan. 21. Swiss Finance Minister Hans-Rudolf Merz said that he sees “no pressure” for intervention on the franc versus the euro, Market News reported yesterday. “I’m happy with the current exchange rate between Swiss franc and the euro,” Merz told Market News in an interview at the World Economic Forum in Davos, Switzerland. Swiss central bank President Philipp Hildebrand said the bank will continue to “resolutely prevent” any strong gains by the franc to fight deflation threats. “Our policy is clear -- we will resolutely prevent an excessive appreciation as long as there are deflationary risks,” Hildebrand said in an interview with the Wall Street Journal published on Jan. 22.

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