Franc Reverses Gain as Buffett Buys Bank of America Shares

Switzerland’s franc weakened against the dollar, reversing gains, after Berkshire Hathaway agreed to invest in Bank of America Corp, reducing concern that another financial crisis may have been brewing.

The franc pared gains against the euro amid renewed speculation the Swiss National Bank is not done with its franc-curbing campaign. Bank of America, the biggest U.S. lender, said Berkshire Hathaway, led by Warren Buffett, will invest $5 billion to bolster the bank whose stocks lost almost half of their value through yesterday on bets it will need to raise funds in capital markets.

“Buffett’s investment in Bank of America helps to calm the market and boosts risk sentiment, and that may have weighed on the franc,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “There was also renewed speculation in the market that the SNB may soon impose new measures on the franc.”

The franc weakened 0.1 percent to 79.63 centimes per dollar at 4:21 p.m. in London after appreciating to 79.10 centimes earlier. It was 0.3 percent stronger against the euro 1.1440 after strengthening to 1.1408. It appreciated 0.5 percent to 97.23 yen.

Switzerland’s currency has strengthened 12 percent this year, the best performer among a basket of the currencies of 10 developed markets, according to Bloomberg Correlation-Weighted Currency Indexes.

Global Slowdown

The SNB has introduced a range of measures, including increasing liquidity in the money market, to curb the currency’s strength after its appreciation made the nation’s exports less competitive. The Swiss manufacturers’ association Swissmem said yesterday the country may face serious economic damage unless a “clear weakening” of the franc begins soon.

The franc has advanced against all of its 16 major counterparts in the past three months on signs the global recovery is losing momentum and the euro-area sovereign debt crisis is deepening. Greek bonds slumped today, pushing the 10-year yields to a euro-era record as concern mounted that Finland’s demands for collateral on loans to the Mediterranean nation will trigger a default.

The Swiss currency has fluctuated between losses and gains this week as investors weighed whether Federal Reserve Chairman Ben S. Bernanke will announce further monetary stimulus measures this week at a symposium tomorrow in Jackson Hole, Wyoming.

Swiss bonds fell. The yield on the 10-year note increased three basis points to 1.04 percent, while two-year yields were little changed at minus 0.02 percent.

Swiss government bonds have handed investors a 2.7 percent return this month, beating a 2.4 percent gain from German bonds, according to indexes compiled by the European Federation of Financial Analysts Societies and Bloomberg.

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