BLBG: Swiss Franc Gains Versus Euro as Weak Equities Spur Safety Bid
The franc appreciated for the first day in three against the euro as weak European equity markets drove investors to the perceived safety of the Swiss currency.
The franc also gained versus the yen and the pound. It has weakened 2.5 percent this year, according to Bloomberg Correlation-weighted currency indexes, paring its gain over the past 12 months to 5.6 percent. The Swiss currency advanced last year as the euro area’s sovereign-debt crisis worsened, spurring investor demand for safe-haven securities. The Stoxx Europe 600 Index of shares declined 0.4 percent.
“There’s a correlation between lower equities and a stronger franc,” said Manuel Oliveri, a currency strategist at UBS AG in Zurich. “Some investors are closing out some risk- sentiment related positions, mainly against the euro.”
The franc gained 0.4 percent to 1.2997 per euro as of 12:18 p.m. in London. It reached 1.3069 against the common currency on Jan. 21, the weakest level since Dec. 9. The Swiss currency was little changed at 95.88 centimes per dollar, after earlier weakening as much as 0.4 percent.
Swiss central bank President Philipp Hildebrand said last week the franc’s ascent was curbing exports and hampering the country’s economic recovery.
The SNB in June stopped buying euros and dollars, a policy aimed to prevent deflation and weaken the franc.
“The danger of deflation has largely vanished,” Hildebrand said on Jan. 20. “At the same time, the economic environment abroad has developed positively.”
“The SNB is giving enough hints to suggest they would be prepared to reenter the market to fight against further currency strength,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “The Swiss are more than happy to keep their currency stabilized against the euro. The SNB is making a strong effort to prevent the franc from being the safe-haven currency of choice.”
To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
