ZURICH: The Swiss franc fell sharply against the dollar on Monday in the wake of a tumbling euro as news Cyprus planned to levy charges against bank deposits as part of its bailout package spooked depositors in other troubled euro zone member states. Traders snapped up the safe haven dollar and sold euros as risk aversion jumped higher. Weakness in the single currency weighed on the franc, particularly as the Swiss National Bank had on Thursday reiterated its commitment to defend a 1.20 per euro cap it imposed 18 months ago. "The dollar looks set to benefit from the problems in Cyprus. Risk aversion should increase. A breakthrough at 0.9450 would make room for (rates of) 0.9570," said analysts at St. Galler Kantonalbank in a note. The franc hit its highest level in three weeks against the euro, and some analysts said it could push further towards the 1.20 per euro cap imposed by the Swiss National Bank in September 2011 to stave off a recession and deflation. "Here the scenario changed all of a sudden. The problems in Cyprus should once again turn the Swiss franc into a safe haven," the St. Galler Kantonalbank analysts said. "Under these circumstances, rates of 1.2090 and possibly even 1.2030/1.2000 cannot be ruled out." The franc fell 0.5 per cent against the dollar compared to Friday's New York close to trade at 0.9436 francs per dollar by 0816 GMT. The franc was 0.5 per cent higher against the euro at 1.2215 francs per euro. "The euro has already come under pressure as a result of Cyprus concerns and will struggle to reverse its losses," said Credit Agricole head of forex strategy Mitul Kotecha. "Euro-dollar 1.2876 will offer some support in the near term and the fact that the speculative market has been short the euro over recent weeks may also limit some of the downside pressure. Nonetheless, any gains are likely to be sold into." Analysts said the cap on the franc could bring it under further pressure against other major currencies as long as the euro remains weak.

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