Swiss Franc Declines to 3-Week Low Against Euro

The Swiss franc weakened to its lowest in more than three weeks against the euro amid signs of the euro area’s economy is gaining strength.

At its meeting later today, the European Central Bank will present new growth and inflation forecasts for the currency bloc, reflecting an expansion in the three months through June that beat forecasts and snapped six quarters of contraction. The ECB’s benchmark interest rate is expected to stay unchanged at a record low of 0.5 percent.

“With the SNB’s monetary policy framework likely untouched for some time to come and in light of encouraging economic signs out of the euro zone there is after all the chance for a slightly more hawkish stance by the ECB,” Reto Huenerwadel, a senior economist for UBS AG in Zurich, said in a note to clients.

The franc fell as much as 0.4 percent to 1.23997, its lowest since Aug. 14, and was down 0.3 percent at 10:17 a.m. in Zurich. Against the dollar it declined 0.6 percent to 94.06 centimes.

Investors tend to buy the franc at times of heightened market stress. Their anxiety about the euro area’s debt crisis prompted them to push the franc nearly to parity with the euro two years ago. The Swiss National Bank (SNBN) responded by setting a cap of 1.20 per euro on the franc in September 2011. SNB President Thomas Jordan said in an interview earlier this week there was no reason to give up the franc ceiling.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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