Swiss Franc Drops Against Euro on Greece as SNB Weighs Controls
The franc fell against the euro after Greek opinion polls showed pro-bailout parties gaining ground in polls, reducing the risk of Europe’s common currency area breaking up and limiting demand for the safety of Swiss assets.
Switzerland’s currency extended declines as Swiss National Bank (SNBN) President Thomas Jordan said a government-led panel was considering controls on capital inflows among measures to stop the franc strengthening if Europe’s debt crisis escalates. New Democracy, which supports Greece’s aid plan negotiated with international lenders, came first in all six opinion polls on May 26 before next month’s general election.
“We are probably going to be trading from a risk-on point of view today,” which may push the franc lower, said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “That will probably come as a bit of a relief to the SNB from an intraday point of view.”
The franc fell 0.1 percent to 1.2019 per euro at 4:50 p.m. London time, leaving it little changed this month. The currency gained 0.2 percent to 95.79 centimes per dollar.
The Swiss working group will focus “mainly on instruments to combat the franc strength based on a joint approach of the government and the central bank,” Jordan told the SonntagsZeitung newspaper in an interview published yesterday. SNB spokesman Walter Meier confirmed Jordan’s remarks.
The franc has dropped 2.5 percent in the past six months, the second-biggest decline after the euro’s 4.8 percent slide among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 1.8 percent.
The SNB countered the franc’s gains by buying euros in the 15 months through June 2010. As the European sovereign debt crisis worsened last year and helped push the franc to a record 1.0080 per euro in September, policy makers imposed a ceiling of 1.20 francs per euro.
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