The Pak Banker - - FRONT PAGE -

The Swiss franc jumped to a one-week high against the euro af­ter the cen­tral bank's record first-half loss fu­eled in­vestor doubts about its abil­ity to curb gains in the cur­rency. The franc strength­ened against all 31 of its most-traded peers and climbed for a fourth straight day ver­sus Europe's sin­gle cur­rency, its long­est run of gains since May.

The Swiss Na­tional Bank re­ported a loss of 50.1 bil­lion francs ($52 bil­lion) in the six months end­ing June, the pe­riod when it aban­doned its 1.20-per-euro ceil­ing on the franc's value. Since ditch­ing the cap in Jan­uary, of­fi­cials have re­lied on neg­a­tive in­ter­est rates and mar­ket in­ter­ven­tion to stem the cur­rency's gains. The ad­vance "comes on the back of the record loss that the SNB made in the first half af­ter they aban­doned the peg," said Valentin Marinov, head of Group-of-10 cur­rency re­search at Credit Agri­cole SA's cor­po­rate and in­vest­ment-bank­ing unit in Lon­don. "The clients think­ing that the Swiss will aban­don their ef­forts to cheapen the franc, given their mount­ing costs, are pre­sum­ably the ones buy­ing now." The franc ap­pre­ci­ated 0.4 per­cent to 1.0551 per euro as of 9:19 a.m. Lon­don time, af­ter reach­ing 1.0549, its strong­est level since July 24. It rose 0.5 per­cent to 96.45 cen­times to the dol­lar. The gains may be short-lived, Marinov said. Aban­don­ing ef­forts to de­fend the ex­change-rate ceil­ing on Jan. 15 sent the franc surg­ing to a record 85.17 cen­times per euro. That jump has made Switzer­land's cur­rency the best per­former this year in a bas­ket of 10 ma­jor peers tracked by Bloomberg Cor­re­la­tion-Weighted In­dexes, with a 12 per­cent ad­vance ver­sus the group.

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