Swiss Franc is New Deutsche Mark, Will Stay Strong for a Decade, UBS Says

The Swiss franc will stay strong and investors should hold it as a proxy for the old German deutsche mark as the currency benefits from economic growth and its status as a haven, UBS AG said.

The franc rose, approaching parity with the U.S. dollar, after a report today showed the nation’s gross domestic product increased 0.9 percent from the first quarter, when it gained 1 percent. The figure beat the 0.8 percent gain predicted in a Bloomberg survey.

“Today’s Swiss second-quarter GDP data confirms how closely Switzerland is matching Germany’s economic performance,” Mansoor Mohi-Uddin, global head of currency strategy in Singapore, wrote in an e-mailed note today. “ We expect the franc to remain strong throughout the decade.”

The currency climbed 0.5 percent to $1.0111 as of 10:50 a.m. in Zurich. It appreciated 0.4 percent to 1.2964 per euro, after strengthening to a record high of 1.2852 on Aug. 31.

The franc gained 14 percent against the euro this year and appreciated 2.4 percent against the dollar.

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

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