By Ruth Pitchford
LONDON, Nov 9 - Most strategists expect the Swiss franc to retain its recent safe haven strength in the next few months, particularly against the dollar, a poll shows.
The survey of 37 analysts, carried out this week, produced mid-range forecasts of 1.64 Swiss francs per dollar in one month's time, 1.63 in three months, 1.61 in six months and 1.63 in 12 months.
That compares with 1.6485/91 at 0900 GMT on Friday, with most strategists expecting the Swiss franc to hold steady on concerns that the U.S. economic downturn will be deep and that the euro zone will trail along behind into recession.
The Swiss currency was seen easing against the euro for the next three months, with mid-range forecasts of 1.4724 Swiss francs per euro in one month and 1.4880 in three months.
And few expected the Swiss franc to revisit its all-time high of 1.4391 per euro, struck soon after the September 11 attacks on U.S. cities. The mid-range forecast was for it to weaken to 1.5105 per euro on a 12-month horizon.
That compares with 1.4679/84 at 0900 GMT on Friday. "If something happens in Afghanistan, any kind of surprise, the Swiss franc will strengthen to a degree," said Peter von Maydell at CSFB.
"But in the absence of that, it's going to be the Swiss National Bank and data flow that determine the direction."
USED TO UNCERTAINTY
And a significant minority see the currency unwinding its gains fairly swiftly as the world's markets get used to the heightened economic and geopolitical uncertainty generated by the September attacks.
"Safe heaven flows are likely to unwind further and draw attention to the weak performance of the Swiss economy," said Ulla Kochwasser at IBJ Germany in Frankfurt, who sees the Swiss weakening steadily to 1.70 per dollar in 12 months.
Kirit Shah at Sanwa International expects the Swiss franc to fade as the dollar reasserts its dominant role in world business and finance and draws investment funds back into U.S. assets. The Swiss franc benefitted from the closure of U.S. markets in the days immediately after the attacks, he says. Now asset markets have stabilised, investors are refocusing on just how vulnerable the Swiss economy is to a global downturn. However, Shah sees the Swiss franc remaining relatively firm against the euro as the introduction of euro notes and coins in the new year revives uncertainties about the three-year-old currency.
Jane Foley at Barclays Capital was one of the most bearish about the Swiss franc, forecasting that the currency will weaken from 1.68 per dollar in a month's time to 2.01 in 12 months. "In the one to three month view, these forecasts are more of a function of dollar strength," she said. "However, we do expect the Swiss National Bank to help push the Swiss TWI (trade weighted index) back to weaker levels on a six to 12 month view...They will loosen policy if necessary to try and get euro/swiss back towards the 1.50 level, potentially higher."
However, von Maydell at CSFB says the SNB's resistance on economic grounds to a strong currency should not be over-emphasised. "The market is always surprised at how strong the Swiss franc can be before it affects the economy," he said.