Investors Turning to the Swiss Franc

Investors are turning their attention to the Swiss Franc and are using US dollars to fund the purchases in a new round of carry trades. Switzerland was second only to Australia in dealing with the fall-out of the global recession, and its economy is now forecast to shrink less than half as much as the euro region this year – 1.9 percent compared with 4 percent according to the Organization for Economic Cooperation and Development.

“There’s very substantial underlying demand for Swissie, generated by one of the developed world’s largest current- account surpluses,” said Paul Meggyesi, a currency strategist in London at JPMorgan Chase & Co., which turned bullish on the franc Nov. 24. “I fail to see the economic emergency which will motivate the SNB to continue to offset that pressure with very substantial foreign-exchange purchases.”

Bloomberg

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