The Swiss franc dropped for a fifth day against the euro, its longest losing streak since July, on speculation Switzerland will take action to curb gains in its currency that are hurting exporters. The euro declined against the yen for a second day as the leaders of Germany and France rejected calls for a joint- borrowing plan to stem the region’s debt crisis and before a report forecast to show inflation slowed. The dollar fell toward a record low against Japan’s currency ahead of data that may signal U.S. price pressures are also easing. “The Swiss franc has been selling off because the market fears that the government is going to do something,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “If you’re a trader with risk on the table, you’re going to stay away from euro-Swiss until you have some clarity over what the future holds.” The franc fell to 1.1510 per euro as of 7:13 a.m. in London from 1.1465 in New York yesterday. It slid 0.4 percent to 79.97 centimes per dollar. The 17-nation euro weakened to 110.32 yen after slipping 0.3 percent to 110.65 yesterday. It traded at $1.4394 from $1.4407. The dollar depreciated to 76.63 yen from 76.80. The Swiss government may forgo 1.3 billion Swiss francs ($1.63 billion) to support the country’s export and tourism industries, which are struggling with the negative effects of the strong currency, the Tagesanzeiger newspaper reported, without citing anyone. Government Meeting Economy Minister Johann Schneider-Ammann and Finance Minister Eveline Widmer-Schlumpf plan to reduce the industries’ contribution rate to social security for a year, the report said. They will discuss the measures at a government meeting today that will focus on measures to counter the strong currency, the newspaper said. “Traders are speculating that there would be some sort of announcement,” on measures to rein in the currency, said Adarsh Sinha, head of strategy for Group of 10 foreign exchange at Bank of America Merrill Lynch in Hong Kong. “What’s driving Swiss franc is people’s speculation that it could be something as extreme as a peg or just a simple normal intervention.” The franc has gained 8.6 percent against the euro and 17 percent versus the dollar this year. The euro fell against the yen after German Chancellor Angela Merkel and French President Nicolas Sarkozy rebuffed a proposed euro-area bond plan, as well as an expansion of the region’s 440 billion-euro ($632 billion) rescue fund. A plan to resubmit a proposal for a financial-transaction tax, which the European Union rejected in 2010, sent stocks lower in the U.S. Tax Plan The rejection of both euro bonds and an expansion of the bailout fund coupled with discussion of a transaction tax “could weigh on European equity and bond markets,” BNP Paribas SA strategists including Ray Attrill in New York wrote in a note to clients. The tax plan “could fall flat, but the uncertainty factor will likely linger and weigh on the euro.” European consumer prices fell 0.6 percent in July after flat readings for May and June, according to the median estimate in a Bloomberg News survey of economists before data from the EU’s statistics office today. Annual inflation in the region slowed to 2.5 percent from June’s 2.7 percent reading and in line with a July 29 initial estimate, the survey predicted. That would still exceed the European Central Bank’s 2 percent ceiling for an eighth month. A Credit Suisse AG index shows traders are betting that the ECB will cut its benchmark interest rate of 1.5 percent by 11 basis points over the next 12 months. A report yesterday showed the euro-area economy grew 0.2 percent in the second quarter, its worst performance since emerging from the last recession in 2009. ‘Underlying Problem’ “European leaders haven’t addressed the underlying problem of deficits in the individual countries, and the exposure for banks and the crisis is set to bubble on,” said Derek Mumford, a Sydney-based director at Rochford Capital, a foreign-exchange and rates risk management firm. “Everything that’s going on in Europe would make it the sickest one at the moment. The euro is possibly at the top end of its range.” The dollar slipped for a second day versus the yen before Labor Department data that economists said will show a 0.1 percent gain in the producer-price index for July, according to a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy costs, probably increased 0.2 percent after a 0.3 percent advance in June. A report tomorrow will show consumer prices excluding food and fuel costs climbed 0.2 percent, the smallest gain in three months, according to a separate survey. “We have no sign of the U.S. coming out of this slow growth period,” said Kurt Magnus, executive director of currency sales at Nomura Holdings Inc. in Sydney. “That’s bearish for the U.S. dollar.” The dollar has slumped 6.3 percent so far this year, the worst performer among the 10 currencies tracked by Bloomberg Correlation-Weighted Indexes. It fell as low as 76.25 yen on March 17, a post-World War II record. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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