The Swiss franc fell against the dollar and the euro on Thursday after hitting fresh highs against both currencies, with traders citing intervention from the Swiss National Bank. Both the SNB and the Bank for International Settlements (BIS) - which traders have said has acted on behalf of the Swiss central bank in the past by selling francs for dollars and euros - declined to comment on the reported intervention.
The SNB has said it will act decisively to prevent an appreciation of the Swiss franc as it fights deflationary pressures and analysts have said the risk of SNB intervention rises at anything under 1.51 francs per euro. SNB Chairman Jean-Pierre Roth said earlier this week, however, the central bank was not targeting a specific level for the currency. The franc was trading at 1.5093 per euro, after hitting 1.5008 per euro, its highest since late June.
In Asia, there was talk of a Swiss name buying rather than action by the SNB. One trader said that while there was speculation the central bank could step in, the price action was not sharp enough for intervention. "I think that the SNB will keep the franc relatively stable to the euro in the short-term. It seems that the SNB doesn't want too strong an appreciation.
The intervention barrier seems to be holding," said Ronald Plasser, fixed income manager at Bankhaus Schelhammer & Schattera. Plasser said, however, central banks were now starting to talk about exiting their non-traditional monetary policies, possibly lessening the likelihood of interventions. Roth said that this week current policy conditions would have to be corrected soon to avoid medium-term inflationary pressures as the economy improved.
Against the dollar, the Swiss franc was also trading lower, easing from a 19-month high hit earlier in the session and after briefly crossing parity. The franc was down 0.4 percent at 1.0008 francs per dollar, after touching 0.9919, its highest since April 2008. Plasser said that he believed the franc would again breach parity with the dollar by year's end, rising to 0.97 francs per dollar.