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Once again, Switzerland is getting saddled with unwanted currency appreciation due to other nations’ struggles.
The franc posted its biggest gain since August against the euro as concern that the U.K. may exit the European Union dragged down the pound and with it the 19-nation shared currency. China’s decision to cut its daily yuan fixing by the most in six weeks also spurred demand for the safest assets. The franc jumped against all of its Group-of-10 counterparts, reaching the strongest level since January versus the euro.
“The euro is suffering across the board, with a confluence of recent events weighing upon it,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “Key amongst them is the weekend EU developments. The franc serves as a viable alternative to store cash. Money is flowing from the euro zone into Switzerland.”
The franc strengthened 0.9 percent to 1.09223 per euro at 5:28 p.m. London time. It earlier strengthened to 1.09161.
Switzerland’s currency strengthened 0.9 percent to 99.11 centimes against the dollar.
The franc retaining its status as a refuge in times on crisis is a setback for Swiss National Bank President Thomas Jordan, who described the currency on Tuesday as being “considerably overvalued” versus the euro.
It had slid in the second half of 2015 even as China’s slowing economy, collapsing commodity prices and stock markets fueled concern that the global economy was slowing, suggesting the Swiss currency was no longer regarded as a source of refuge from turmoil.
By Lukanyo Mnyanda and Mannish Jha – Bloomberg
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