Swiss Franc Gains as Japan Disaster Prompts Safety Demand, Rates on Hold
The Swiss franc strengthened for a fifth day against the dollar as Japan’s struggle to avert disaster at a nuclear-power plant spurred demand for safety and the Swiss National Bank kept interest rates unchanged.
Switzerland’s currency climbed to its strongest level since Jan. 3 against the euro. The Zurich-based SNB left its three- month Libor target rate at 0.25 percent, in line with the forecasts of all 20 economists in a Bloomberg News survey. The franc advanced against its higher-yielding peers, including the Australian and New Zealand dollars, amid concern that Japan’s earthquake will hamper the global economic recovery, boosting demand for the currency as a haven.
Risk aversion is behind recent moves,” said Sven Schubert, a foreign-exchange analyst at Credit Suisse Group AG in Zurich. “We don’t see an immediate need for monetary tightening from the SNB.”
The Swiss franc strengthened 0.5 percent to 90.39 centimes per dollar as of 9:44 a.m. in London, after appreciating earlier to 89.11, the strongest since Bloomberg records began in 1971. Switzerland’s currency was at 1.2666 per euro, after strengthening earlier to 1.2433.
The SNB predicted inflation of 0.8 percent in 2011, compared with a prior forecast of 0.4 percent. For 2012, it projects 1.1 percent consumer price growth, up from 1 percent previously. It raised its forecast for economic growth this year to 2 percent from 1.5 percent.
More than 300 workers are racing to prevent a meltdown and spread of radiation from the crippled Fukushima Dai-Ichi power station north of Tokyo, an increase from a core group of 50 engineers yesterday, Tokyo Electric Power Co. said. The nation’s most powerful earthquake on record triggered a tsunami that killed thousands and damaged the reactors’ cooling systems.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
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