The Swiss franc fell to a five-week low against the euro after euro-area governments approved additional aid to Greece, reducing demand for the relative safety of Switzerland’s currency.
The franc weakened for a fourth day against the common currency and declined versus all except one of its 16 major counterparts as European finance ministers agreed to release 3 billion euros ($3.9 billion) of aid to Greece, seeking to counter the region’s debt crisis.
“Sentiment remained quite upbeat this morning, with Greece getting another aid tranche, which is contributing to the calming of tensions,” Christian Rohrer at Luzerner Kantonalbank AG based in Lucerne, Switzerland, wrote in an e-mailed research note.
The franc declined 0.4 percent to 1.24544 per euro as of 12:36 p.m. in Zurich after depreciating to 1.24673, the weakest level since June 3. The Swiss currency dropped 0.5 percent to 96.83 centimes per dollar.
Greece will get 2.5 billion euros of aid this month and the rest in October, as long as Prime Minister Antonis Samaras’s coalition delivers on economic reforms and cuts to spending. Creditors approved the financing after the European Commission, International Monetary Fund and European Central Bank worked through the weekend to seal an accord with the Greek government on deficit-reduction steps.
The Swiss National Bank set a cap of 1.20 per euro on the franc in September 2011 after the currency surged as investors sought a haven from the euro-area debt crisis. With European tensions easing, the franc weakened beyond 1.26 per euro in May for the first time since 2011.
Abolishing the currency ceiling is still a way off, SNB President Thomas Jordan said at the central bank’s most recent policy meeting on June 20.