29 November 2004, 10:27  Swiss franc eases after SNB warns on franc strength

ZURICH, Nov 29 - The Swiss franc eased slightly from nine-year highs against the dollar on Monday, and was stable against the euro, after the Swiss central bank expressed concern over the franc's strength./br/ Swiss National Bank (SNB) Chairman Jean-Pierre Roth said speculative rises in the Swiss franc could prompt corrective behaviour from the central bank, signalling it might not raise interest rates for a third time this year next month./br/ "Recent foreign exchange market developments show that in highly turbulent times the Swiss franc can come under upward speculative pressure," Roth said in a speech prepared for delivery in Jerusalem./br/ The dollar last changed hands at 1.1446/52 francs, compared to 1.1390/95 francs late on Friday, and 1.1408/12 just before Roth's speech on Monday. The euro traded at 1.5139/44 francs, compared to around 1.5111/16 francs./br/ A weak dollar makes Swiss exports more expensive, weakening a key pillar of the country's economy which has been recovering on the back of strong export growth./br/ The greenback suffered against major currencies on Friday after a report -- later denied - that China's central bank had cut back on U.S. Treasuries in its foreign exchange reserves./br/ The report kindled one of the market's biggest fears -- that Asian banks in particular are becoming wary of funding the record U.S. current account deficit and holding dollar investments./br/ On the domestic front, Roth's comments came on the heels of figures released on Friday showing the Swiss economy grew a modest 0.4 percent in the third quarter from the previous quarter and the key KOF indicator, which pointed to even slower growth ahead./br/ Market-watchers will also look ahead to November consumer price inflation data, due on Tuesday, and the November Puchasing Manager's Index, due Wednesday, for fresh clues on the Swiss economy.

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