Swiss Franc Weaker on Intervention Speculation

The Swiss franc continues to gain over most of the major currencies despite the central bank’s attempts to lessen the franc’s appeal as a safety haven in light of the problems in the U.S. and the Eurozone. One possible form of intervention being considered is to set a “target” limiting the franc’s value.

“The market is rightly nervous about what’s likely to come from the Swiss authorities as they have a track record of going down more unconventional policy steps,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “If the steps will be enough to reverse the Swiss franc’s strengthening trend remains to be seen, but at these levels of overvaluation, which are very extreme, the risk-reward is more favorable in their way.”

Source: Bloomberg

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