The euro may slide to $1.36 by year end on concern that the European sovereign-debt crisis will worsen, according to Ian Stannard, head of European foreign- exchange strategy at Morgan Stanley in London. “Until we see a longer-term agreement, until we see the European authorities able to bring in a framework to deal with these problems before they arise, then the euro is going to continue to remain extremely vulnerable,” Stannard said in an interview in London yesterday. “The dollar will continue to be relatively well supported, particularly in an environment where risk aversion is likely to remain high.” The euro may also weaken to a record 1.13 against the Swiss franc until European officials “restore confidence,” he said. He does not expect Switzerland’s policy makers to intervene in currency markets to weaken the franc after similar attempts contributed to a record loss of $21 billion at the central bank in 2010. “Given the size of the Swiss National Bank’s balance sheet following the last rounds of intervention, it makes it very difficult for them to come back in and carry out further action,” Stannard said. “I wouldn’t expect them to come into the market so Swiss franc strength is going to continue.” The euro was little changed at $1.4154, as of 12:21 p.m. in London, and last traded at $1.36 on Feb. 22. It was 0.2 percent stronger at 1.1563 Swiss francs. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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