The Swiss franc rose to the highest level against the dollar in 19 months as a partial shutdown of the U.S. government boosted demand for Switzerland’s currency as a haven.
The franc, which investor seek at times of heightened global stress, climbed against all but two of its 16 major peers. Against the greenback it strengthened through 90 cents per dollar for the first time since Feb. 29, 2012.
“That really is the safe haven, reserve currency move,” Michael Plavnik, head of the STIRT desk at Citigroup Inc. in London, said in an interview on Bloomberg Television’s “On the Move” with Manus Cranny. “We’ve also actually have seen the Swiss economy do quite well relatively so there’s maybe some pressure on the SNB. They’ve gotten pretty much a free ride on the 1.20 peg so we may begin to actually test it. I don’t think we’ll get there but we might make it uncomfortable for the SNB.”
The Swiss currency rose 0.3 percent to 90.23 centimes per dollar at 10:50 a.m. in Zurich, after rising to as much as 89.93 centimes. Against the euro it was little changed at 1.2225.
The Swiss National Bank set a cap of 1.20 per euro on the franc in September 2011, after it nearly touched parity with the euro amid the 17-member bloc’s debt crisis. The Zurich-based central bank cited the risk of deflation and a recession as its justification for the step.
This is the first U.S. shutdown in 17 years as House and Senate lawmakers failed to agree on a spending plan for the new fiscal year that started today.
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