BLBG:Swiss Franc Declines Against Dollar Before SNB Monetary Policy Meeting
The franc fell against the dollar as speculation the country’s central bank will step in to stem the currency’s appreciation reduced demand for the nation’s assets.
The Swiss currency weakened versus nine of its 16 major peers tracked by Bloomberg, declining most against the U.S. and Taiwanese dollars, as concern that euro-region leaders failed to find a solution to the region’s debt crisis at a summit last week boosted assets with fewer ties to Europe. Speculation that the Swiss National Bank will weaken the franc, currently pegged at no stronger than 1.20 per euro, at its quarterly policy meeting on Dec. 15 also stemmed demand for the currency.
“The market is carrying significant short Swiss exposure into Thursday’s SNB meeting,” BNP Paribas SA (BNP) analysts wrote in a note to investors. “Speculation that the SNB will announce that the floor under euro-Swiss franc is being raised to 1.25 or even 1.30 thus continues to run.”
A short position is a bet that an asset will depreciate.
The franc was 0.4 percent weaker against the dollar at 92.68 centimes at 9:06 a.m. London time. It was 0.1 percent stronger at 1.2341 per euro.
European leaders unveiled a blueprint last week for a fiscal accord to save the euro, adding 200 billion euros ($267 billion) to a bailout fund and tightening rules to curb future debts. The Brussels summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s Investors Service said in its Weekly Credit Outlook.
Negative interest rates and capital controls “are issues which are being examined” by a Swiss government committee looking at ways to counter the currency’s strength, Finance Minister Eveline Widmer-Schlumpf said Dec. 7.
Even as the SNB weakened the currency, the franc has appreciated 4.1 percent in the past year, the second-best performer after the Japanese yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
