Futures Market News
Swiss franc sinks toward dollar parity
Jul 16, 2012 11:26 AM
The monetary unit of Switzerland is growing weaker against the world's reserve currency and is driving toward parity, two investment houses' analysts told Bloomberg.
The hobbled 17-nation common currency of the European Union is proving to be detrimental to the safe-haven currency, according to Credit Suisse Group and Swissquote Bank. On Friday, the franc was hovering about its lowest value in more than a year-and-a-half against the U.S. dollar. The franc has lost about 20 percent of its value against the U.S. dollar since the central bank of Switzerland executed a cap for appreciation in September of last year.
"If the euro weakens due to global risk aversion toward $1.20, we would expect dollar-franc to reach parity," foreign-exchange strategist Bernd Berg with Credit Suisse in Zurich told Bloomberg.
The cap administered in September was part of a drive to ease exporters' challenges as the Swiss National Bank has decided to preserve the euro maximum of 1.20.
Ben Bernanke, chief of the U.S. Federal Reserve, was set to deliver congressional testimony on Tuesday and Wednesday, according to Reuters. Conjecture has grown about whether the central bank will employ another round of intervention to spur economic growth.
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