Swiss franc weakens to symbolic low
The Swiss franc has fallen to its lowest point since the January 2015 unpegging of the currency from the euro. The symbolic moment will be a huge relief to Swiss exporters and the tourism industry.
As of Thursday morning, the franc was trading at 1.12 to the euro, a drop of 1.8 percent since Monday.
It is the weakest level reached since the decision by the Swiss National Bank (SNB) to remove the cap two-and-a-half years ago. The surprise move led to a spike in the value of the franc, which reached near-parity with the euro in the following days.
The current slide in the franc’s relative value comes in a context of a changed outlook for the global economy, in which the expectation of tighter monetary policy in the euro area, as well as in the US, stands in contrast to noises from the SNB that they plan to keep interest rates low.
This could lead to a shift away from the perception of the Swiss franc as a ‘safe haven’ trade, which has kept the currency at a level described by the SNB as “artificially high” in recent years.
Stronger euro
The drop in value of the franc, good news for Swiss exporters after some tough years, is also due to the growing strength of the euro, Commerzbank’s Anja Praefcke told the Swiss news agency SDA. “Upside pressure on the franc will diminish as we see higher euro rates,” she said.
The eurozone economy grew at its fastest rate in two years in the first quarter of 2017, while political conditions in Europe have shown signs of stabilising, particularly with the recent election of Emmanuel Macron in France.
This may impact investor behaviour, with Switzerland less likely to be perceived as a safe island of stability that it enjoyed during the worst of the eurozone crisis.
The Swiss franc also fell marginally against the US dollar, though the latter has been falling in recent months against the euro, since a peak in January 2017. The dollar currently buys CHF0.9597.
swissinfo.ch and agencies/dos
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