Swiss franc exchange rate weakens after SNB comments

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The Swiss franc exchange rate weakened making it the worst performer versus the US dollar and euro. This was commented by r the Switzerland’s central bank (SNB) due to the recent appreciation versus the euro poses a threat to economic growth this year.

Switzerland’s currency slid against all of its 16 most actively traded counterparts monitored by Bloomberg, losing most against the South Korean won. It tumbled versus the euro for a fourth straight day

The currency’s gains are posing an “extraordinary challenge” to some exporters, Swiss National Bank Vice President Thomas Jordan said at an event in Reichenau, Switzerland, late yesterday. Jordan refused to say whether the bank is considering a renewed round of foreign-currency purchases to weaken the franc.

“The recent appreciation of the franc is clearly a big concern to the Swiss National Bank,” Peter Rosenstreich, chief market analyst at ACM Advanced Currency Markets, said by phone from Geneva. “The exodus that we’re seeing from the Swiss franc around these comments shows the nervousness of the market to any possible intervention.”

The Swiss currency depreciated as much as 0.9 percent to 1.2806 per euro. It traded 0.7 percent weaker at 1.2782 as of 8:13 a.m. in London, taking its four-day slide to 2.4 percent. The franc slid 0.8 percent to 97.39 centimes per dollar.

SNB spokesman Nicolas Haymoz declined to comment on the franc’s moves today.

‘Enormous Interest’

The franc has still appreciated about 8 percent against the euro since the start of November. It reached a record 1.2402 on Dec. 30 as Europe’s worsening sovereign-debt crisis encouraged purchases of assets perceived as the least risky.

“Volatility has strongly increased” because of the European debt crisis, and Switzerland has “an enormous interest for Europe to solve its debt problems” as a worsening crisis would likely push the franc higher, Jordan said last night.

The Swiss central bank spent more than a year intervening in currency markets to weaken the franc and head off deflation risks before abandoning that policy in June 2010. The central bank said on 24th December that it was ready to “take the measures necessary” to counter any deflationary threats.

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