BLBG:Swiss Franc Strengthens to Record Versus Euro Amid Global Growth Concern
The Swiss franc strengthened to 1.10 against the euro for the first time since records began as concern mounted that debt problems in the U.S. and the euro region will damp growth, boosting its appeal as a haven.
Switzerland’s currency strengthened against all 16 of its major peers tracked by Bloomberg, extending gains that Economy Minister Johann Schneider-Ammann said may mean “tough years” for exporters. The Institute for Supply Management reported yesterday that its U.S. factory index slumped to 50.9 in July, the least in two years, from 55.3 a month earlier. Economists in a Bloomberg News survey projected it would drop to 54.5.
“The Swiss National Bank and corporate Switzerland are bearing the brunt of the wider debt problems in the U.S. and euro zone,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We are already seeing the Swiss economy hurt by the currency strengthening. With further strengthening, it is going to prove more difficult for the economy as a whole and for individual companies.”
The Swiss currency jumped 0.8 percent to 1.1075 per euro as of 9:14 a.m. in London, after appreciating to 1.09877, the strongest since the unified European currency’s introduction in 1999. The franc gained 0.6 percent to 77.89 centimes per dollar. It reached a record 77.31 centimes yesterday.
The strength of the franc against the euro and the dollar is here to stay, heralding some “extremely tough years” for exporters and the tourism industry, Schneider-Ammann said yesterday.
A report today showed Swiss manufacturing growth unexpectedly accelerated in July. The Swiss Purchasing Managers’ Index increased to 53.5 last month from 53.4 in the prior month, according to Credit Suisse Group AG index. Economists forecast the gauge to fall to 52.5, the median of 11 forecasts in a Bloomberg News survey shows.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Emily Blewett in London at eblewett@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
