Swiss franc hits record against euro
BERN: The Swiss franc strengthened to a record as the euro slid to 1.2701 francs, fueling speculation the Swiss central bank could exploit the paucity of market liquidity and intervene to halt the currency's rise.
"The euro/franc has been on a one-way, downward trajectory for the past month, and this could be getting too much for the Swiss National Bank," said David Kohl currency strategist at Bank Julius Baer. "The timing would certainly be perfect, with liquidity very thin."
The euro came under early selling pressure following the steep downgrade to Ireland's credit rating Friday, with investors piling into the safety of the franc on concerns the problems could spread further afield. A renewed flare-up of tensions between North and South Korea also boosted demand for the franc, traditionally sought-after in times of crisis.
The franc traded recently at 1.2721 against the euro, after earlier reaching a record 1.2701. Against the dollar the Swiss currency was last at 0.9666.
The Swiss central bank in June stepped back from intervening to try and arrest the franc's relentless appreciation, after accumulating record amounts of euro holdings in its currency reserves.
However, the SNB Thursday noted the "renewed financial market tensions" that were pushing the franc higher, and warned that should these persist and produce deflationary risks, it "would take the measures necessary to ensure price stability."
The EUR/CHF's price swings Monday come a against a background of thinning liquidity, with many players already having squared positions before the Christmas break. -PB News