The Swiss franc may strengthen to 1.28 per euro as signs that the global economic recovery is faltering boost demand for assets perceived as a refuge, said Mansoor Mohi-Uddin, head of currency strategy at UBS AG. “We expect it to go to that level sooner rather than later as risk aversion is rising,” Mohi-Uddin said in an interview. “Global policy makers are becoming more pessimistic about the global outlook. Safe-haven currencies such as the dollar, the yen and the franc will stay in demand.” Nobel Prize-winning economist Joseph Stiglitz today said the European economy is at risk of slowing into recession as governments cut spending to reduce their budget deficits. Bank of England policy maker Martin Weale was quoted by the London- based Times as saying there is a “real risk” of a second recession in the U.K. UBS also suggested investors buy the franc against the euro on speculation the Swiss National Bank, the country’s central bank, will be more relaxed about the franc’s strength. “I don’t think the SNB will sound overly cautious at the next policy meeting, as the Swiss economy is clearly recovering,” said Mohi-uddin. “That should underpin demand for the franc.” The Swiss franc has gained 13 percent against the euro this year. The SNB, which began selling francs in March 2009 to curb gains and ward off deflation, signalled last June that it would end the policy, saying risks of deflation, or a general drop of consumer prices, had “largely disappeared.” The franc rose 0.5 percent against the euro to 1.3109 as of 4:50 p.m. in Zurich. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

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