Swiss Franc Surges Most Since 2011 on Haven Demand: Zurich Mover
The Swiss franc rose the most against the euro since the day before the central bank imposed its cap on the currency in 2011 as the prospect of a reduction in U.S. monetary stimulus boosted demand for haven assets.
The franc strengthened against all but one of its 16 major peers as stocks slid around the world after a report showed Chinese manufacturing unexpectedly contracted. Switzerland’s currency, which yesterday weakened through 1.26 per euro for the first time since May 2011, is sought as a haven at times of heightened global stress, according to a Swiss National Bank study published last month. The Federal Reserve may slow monthly bond purchases, Chairman Ben S. Bernanke said yesterday.
“Bernanke’s comments turned markets to a risk-off mode and are pushing investors toward haven currencies,” Peter Rosenstreich, chief foreign-exchange analyst at Swissquote Bank SA in Geneva, said in a telephone interview.
The Swiss franc advanced as much as 1.3 percent to 1.2420 per euro, the biggest gain since Sept. 5, 2011, the day before the SNB set a cap of 1.20 francs per euro to ward off deflation and a recession. It was at 1.2462 at 12:34 p.m Zurich time. Against the dollar it climbed 1.1 percent to 96.75 centimes.
The franc slumped yesterday, when SNB President Thomas Jordan said that a shift of the limit on the euro exchange rate was in the SNB’s toolkit.
While Jordan’s comments raised the level of uncertainty on what the SNB would do next, “the market got ahead of itself” in expecting a move from the central bank, said Rosenstreich.
To contact the reporter on this story: Zoe Schneeweiss in Zurich at email@example.com