By Bo Nielsen and Matthew Brown Nov. 28 (Bloomberg) -- The Swiss franc’s decline against the dollar since July has more to do with the global thirst for dollars than with any loss of allure as a haven, according to UBS AG. While the franc dropped 13 percent versus the dollar since July, it gained against every other major currency except the yen, rising 25 percent against Australia’s dollar and 5.5 percent versus the euro. “It’s a flight-to-liquidity story,” said Geoffrey Yu, a currency strategist in London at UBS. “If a Swiss-based investor or franc-holding investor wants a liquid asset, he or she would go and buy U.S. Treasuries instead of holding onto franc-denominated assets.” The CHART OF THE DAY shows the franc weakened versus the dollar since July just as the global financial turmoil fueled demand for the most tradable assets, driving the yield on the two-year Treasury note to below 1 percent for the first time. The white line at the top of the chart shows the Treasury yield. The orange line shows the dollar’s value versus the franc. The share of foreign assets in U.S. mutual-fund portfolios fell to 22.5 percent as of Oct. 31, from 26 percent in the middle of the year, as investors sold overseas holdings to bring cash back home, according to UBS. “We don’t think we’ve seen the end of repatriation flows or market-risk aversion,” Yu said. “So the Swiss franc will benefit against other currencies in the G10. But against more liquid currencies, it’s likely to remain weaker.” To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net; Matthew Brown in London at mbrown42@bloomberg.net

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