Swiss Franc Strengthens Against Euro as Currency Cap Speculation Recedes
The franc strengthened against the euro as investors pared expectations that the Swiss National Bank will adjust its cap to further weaken the currency.
Switzerland’s currency surged versus the dollar, strengthening through 90 centimes for the first time this month, as European stocks climbed and investors reduced demand for the perceived safety of the greenback. The Stoxx Europe 600 Index rose 1.5 percent amid optimism the European Union bank recapitalization proposals may help to stem the debt crisis.
An adjustment of the SNB ceiling “isn’t likely going to happen,” said Chris Walker, a currency strategist at UBS AG in London. The market is today “getting rid of those rumors and pricing against that,” he said.
The franc strengthened 0.3 percent to 1.2355 per euro at 4:20 p.m. London time. It jumped 1.6 percent to 89.44 centimes per dollar.
The SNB imposed a ceiling on the franc for the first time in more than three decades on Sept. 6, pledging to defend the target with the “utmost determination.”
InterContinentalExchange Inc.’s Dollar Index, which tracks the greenback versus the currencies of six trading partners, fell 0.9 percent today.
Franc strength “is coming from a lot of dollar selling,” Walker said. “You can’t really view the Swiss franc as a haven anymore because it has the floor. That type of dynamic has completely changed.”
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