THE Swiss franc fell to a two-week low against both the dollar and the euro yesterday, as speculation mounted that the Swiss National Bank (SNB) would intervene to halt its currency’s appreciation.
The euro climbed 1.6 per cent to hit 1.1266 Swiss francs, having spiked to 1.1458 Swiss francs in earlier trading. Last week the euro sunk to a record low of close to parity with the Swiss franc.
Yet the Swiss franc – which has become increasingly popular as a safe haven for investors – is unlikely to continue to fall against larger currencies unless the rumours materialise into firm action from the SNB.
Ongoing trouble in the Eurozone is likely to keep propping up the Swiss franc against the euro. Speculation that the Swiss franc would be pegged to the euro has escalated since a senior SNB official refused to rule out the measure last week.
“The Swiss franc is oversold in the short-term because the moves are based on hopes of a nuclear option from the SNB,” said Lena Komileva of Brown Brothers Harriman. “The driver has been speculation and not any change in global sentiment.”