Swiss National Bank Lets Euro Set Another Record Low Vs. Swiss Franc

After buying an unprecedented amount of foreign currency reserves in May, the Swiss National Bank apparently has been absent this month from foreign-exchange markets, allowing the euro to set a fresh record low against the Swiss franc.

The Swiss government on Tuesday said its central bank acquired 78.8 billion Swiss francs ($67.7 billion) in foreign-currency reserves last month as it sought to contain the steady appreciation in its currency, a favored haven from the euro zone's financial turmoil, Wall Street Journal says.

“The euro zone debt crisis has resulted in strong demand for the Swiss franc,” Mansoor Mohi-uddin, the global head of foreign-exchange strategy at UBS in Singapore, said today in a research note. “This mega-trend is likely to continue through 2010 to 2020 as investors increasingly hold the currency as a substitute for the old German mark.”

The Swiss franc strengthened 7.1 percent against the euro this year, trading at a record 1.3746 per euro yesterday, boosted by demand for the safest assets as the debt crisis that started in Greece threatened to slow euro-area growth. Switzerland’s foreign-currency reserves jumped to 232.4 billion Swiss francs ($202 billion) in May as the Swiss National Bank intervened to prevent it appreciating faster, BusinessWeek informs.

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