Franc Falls Most in Eight Weeks Versus Dollar as Manufacturing Contracts
The Swiss franc fell the most in eight weeks against the dollar after an industry report showed manufacturing output shrank more than economists forecast in October, adding to signs the economic slump is deepening.
The currency also weakened versus the euro as the data underlined concern the economy is losing momentum after the currency’s gains earlier this year eroded exports. The central bank on Sept. 6 imposed a ceiling of 1.20 francs per euro to cap the currency’s advance as Europe’s debt crisis fueled demand for the relative safety of Swiss assets.
“The PMI manufacturing data that came out this morning was much, much lower than forecast,” said Elizabeth Gregory, a Geneva-based market strategist at Swissquote Bank SA. “The franc is suffering because of that and also because it can no longer strengthen when there’s a flight to quality because the SNB’s floor under the franc against the euro limits it being used as a haven.”
The franc depreciated 1.4 percent to 88.91 centimes per dollar at 4:16 p.m. London time, after dropping as much as 2.1 percent, the biggest intraday decline since Sept. 9. The currency fell 0.1 percent to 1.2161 per euro.
The Procure.ch Purchasing Managers’ Index dropped to 46.9 from 48.2 in September when adjusted for seasonal swings, Credit Suisse Group AG in Zurich said in an e-mailed statement today. That’s the lowest since July 2009. Economists forecast a decline to 47.7, according to a Bloomberg News survey. A reading below 50 indicates contraction.
The franc has fallen 7.8 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. Over the past year it has still gained 10 percent, the indexes show.
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