May 24 (Bloomberg) -- Switzerland’s franc depreciated to its weakest level against the euro since March 16 amid speculation the Swiss central bank may take action to discourage investors from using the currency as a refuge.
There were “rumors that the Swiss National Bank could introduce a tax on deposits,” said Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva. “There was some chatter about U.S. dollar swap lines being extended and I think that might have helped the market and unwound some short euro positions.” A short position is a bet on weaker prices.
SNB spokeswoman Silvia Oppliger declined to comment on the Swiss franc exchange rate. Finance Ministry spokesman Roland Meier wouldn’t comment on the tax speculation.
The franc slid as much as 0.6 percent, its biggest intraday decline since March 14, to 1.20766 per euro. It pared the depreciation, trading less than 0.2 percent weaker at 1.20285 per euro, as of 4:33 p.m. London time.
Today’s move may have occurred after one bank sold the franc against the euro, according to Mary Nicola, a New York-based currency strategist at BNP Paribas SA.
“There was speculation that it was the SNB intervening but we think that it is just” one bank seeking to exit a trade betting on the franc’s advance, Nicola said.
The Swiss National Bank imposed a cap of 1.20 francs per euro in September to protect exporters as investors seeking a haven from the European debt crisis drove the franc to a record high. The currency briefly strengthened through the SNB’s exchange-rate limit on April 5, prompting policy makers to affirm they’re prepared to buy foreign currency in unlimited quantities to defend the price limit.
The franc has depreciated 2.2 percent in the past year, the third-worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes after the Swedish krona and the euro. The dollar gained 7.3 percent while the euro slipped 5.1 percent.
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