Dec. 12 (Bloomberg) -- The franc fell against the dollar as concern that European leaders have failed to find a solution to the region’s crisis spurred demand for assets with fewer ties to the euro area.
The Swiss currency weakened versus seven of 16 major peers tracked by Bloomberg, with its biggest drops against the U.S. and Taiwanese dollars. Moody’s Investors Service said last week’s European Union summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions. The franc was little changed against the euro as speculation that the Swiss National Bank will weaken the franc at its quarterly policy meeting on Dec. 15 retreated.
“It’s not just a risk aversion story today; it’s also about U.S. economic strength versus European economic weakness,” said Michael Derks, a market strategist at FXPro Financial Services Ltd. in London. There are “slightly diminished prospects for the SNB meeting, with the market seeming less convinced of aggressive SNB action,” he said.
The franc was 1.3 percent weaker against the dollar at 93.47 centimes at 4:42 p.m. London time. It traded at 1.2351 per euro from 1.2358 at the end of last week.
European leaders unveiled a blueprint last week for a fiscal accord to save the euro, adding 200 billion euros ($267 billion) to a bailout fund and tightening rules to curb future debts.
Negative interest rates and capital controls “are issues which are being examined” by a Swiss government committee looking at ways to counter the currency’s strength, Finance Minister Eveline Widmer-Schlumpf said Dec. 7.
Even as the SNB weakened the currency, the franc has appreciated 3.8 percent in the past year, the second-best performer after the Japanese yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes.
--Editors: Matthew Brown, Mark McCord
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