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Euro Weakens Amid Speculation Swiss National Bank Sold Currency

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Aug. 15 (Bloomberg) -- The euro weakened on speculation the Swiss National Bank sold the currency amid an increase in its foreign-exchange holdings to a record last month.

“I’ve heard that a bank has been working with the SNB selling euros against the pound,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “In this instance it’s against the pound, but the selling pressure of euros in general is acting as a negative on the currency as a whole, so all the euro crosses are lower, including euro-dollar.”

Silvia Oppliger, a Zurich-based SNB spokeswoman, declined to comment.

The euro weakened as much as 0.5 percent against the pound to 78.25 pence, and was at 78.28 pence at 1:53 p.m. in London. It fell 0.4 percent to $1.2276, depreciating against all but one of its 16 major peers tracked by Bloomberg.

The Swiss central bank’s foreign-currency reserves swelled 11.3 percent in July to 406.5 billion Swiss francs ($416 billion), it said on Aug. 7. Walter Meier, an SNB spokesman in Zurich, said then that “a large part” of the increase resulted from currency purchases to defend the minimum exchange rate.

SNB President Thomas Jordan has pledged to enforce the franc cap of 1.20 per euro “with unlimited purchases of foreign currencies if needed.” The central bank implemented the policy in September to fight deflation and help exporters.

To contact the reporters on this story: Eleanor Lawrie in London at elawrie@bloomberg.net; Max Julius in London at mjulius4@bloomberg.net

To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net; Deborah L Hyde at dhyde10@bloomberg.net

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