The Swiss franc dropped from a 15 month high versus the euro on Friday, with traders in Asia saying the Swiss National Bank had stepped in and bought euros to push the Swiss unit lower. The euro has been under pressure in the past month on concerns about sovereign debt problems in the eurozone, first in Greece and then in Spain and Portugal, exacerbating the dilemma of the SNB, which is keen to prevent a strengthening in the franc to help economic recovery.
"Perhaps the SNB is willing to tolerate a bit stronger (franc) because the Swiss economy has picked up," said Ursina Kubli, currency strategist with Sarasin. "It makes sense because at night the volumes are thinner," Kubli said of the Asian intervention talk.
The SNB declined to comment. To combat the worst recession in decades, in March the SNB launched unconventional measures - including rock-bottom interest rates, corporate debt purchases and foreign exchange intervention. Markets suspect the SNB has intervened at least 6 times.
Traders said the SNB bought euros for francs in a rare foray into Asian trading time, the central bank said to have traded on trading platform EBS. The franc eased 0.4 percent against the euro compared with the New York close, trading at 1.4695 per euro at 0726 GMT. It had soared to 1.4559 earlier in the session, its highest since October 2008. Kubli said the SNB may last have intervened a week ago, when the franc was at 1.47 per euro. Against the dollar, the franc eased.
The dollar index, a measure of the greenback against six other major currencies, earlier surged to its strongest in seven months. The franc was down 0.4 percent against the dollar at 1.0706 per dollar. The euro was also pressured by comments from European Central Bank President Jean-Claude Trichet that many members of the eurozone will have large and sharply rising fiscal imbalances.
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