The Swiss franc dropped to its lowest against the euro since the European common currency was introduced in January 1999.
Switzerland's currency today slid to 1.6225 per euro, the first time it has traded at that level since the currency used in the $10 trillion euro region economy began trading. The franc last year fell for a second year, its first back-to-back drop against the euro, on views the European Central Bank will raise interest faster than its Swiss counterpart. „Its like a magnet, the market has been testing the lows in recent days, and now its slipped through,” said Benedikt Germanier, currency strategist in Zurich at UBS AG.
„The franc could fall to 1.63 per euro” in a month's time, he said. Against the euro, the franc fell to 1.6225 at 12:11 p.m. in Zurich from 1.6156 late yesterday. The franc previous low versus the euro was 1.6210, reached in May 1999. It also slipped to 1.2473 versus the dollar from 1.2406 on January 23. The Swiss National raised its benchmark interest rate last month to 2%, while the Frankfurt-based ECB has lifted rates six times since 2005, to 3.5%. The Zurich-based Swiss central bank, which has the lowest interest rate outside of Japan, charges 1.5 percentage points less to borrow money for three months than the ECB. (Bloomberg)