BLBG:Switzerland Franc Declines Against Dollar, Euro as Manufacturing Contracts
Switzerland’s franc dropped against the dollar for a third day after data showed the nation’s manufacturing output contracted more than forecast in October, adding to signs of a deepening economic slump.
The franc fell versus most of its 16 major peers tracked by Bloomberg as the data underlined concern Switzerland’s economy is losing momentum as a 12 percent appreciation versus the euro in the past year erodes overseas sales of goods and European demand falters. The Swiss central bank on Sept. 6 imposed a ceiling of 1.20 francs versus its 17-nation shared peer to fight deflation and help exporters as the euro region’s worsening debt crisis prompted investors to pile into the Swiss currency.
“The PMI manufacturing data that came out this morning was much, much lower than forecast,” said Elizabeth Gregory, a Geneva-based market strategist at Swissquote Bank SA. “The franc is suffering because of that and also because it can no longer strengthen when there’s a flight to quality because the SNB’s floor under the franc against the euro limits it being used as a haven.”
The franc depreciated 1.4 percent to 88.91 centimes per dollar at 10:05 a.m. London time, extending a decline of 1.6 percent yesterday. It slid as much as 1.6 percent to 89.06, the weakest since Oct. 21. Switzerland’s currency fell 0.2 percent to 1.2178 per euro.
The Procure.ch Purchasing Managers’ Index fell to 46.9 from 48.2 in September when adjusted for seasonal swings, Credit Suisse Group AG in Zurich said in an e-mailed statement today. That’s the lowest since July 2009. Economists projected a drop to 47.7, the median of 11 forecasts in a Bloomberg News survey. A reading below 50 indicates contraction.
The Swiss Market Index, a measure of the 20 biggest and most actively traded companies, dropped 2.2 percent.
The franc has fallen 8.1 percent in the past three months, since the SNB imposed its cap, according to Bloomberg Correlation-Weighted Indexes, which track a basket of 10 developed-nation currencies. That trims its yearly gain to 9.9 percent, the indexes show.
To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
