Swiss central bank aggressively pushes franc down

Swiss Franc Sinks; Central Bank Spotted Selling

By Takashi Mochizuki, MarketWatch.com

TOKYO — The Swiss franc fell to multi-month lows against the euro and dollar in Asia Friday as market participants said Switzerland’s central bank made a rare and aggressive intervention to curb its currency.

The euro spiked around 0300 GMT to CHF1.4905, its highest since Dec. 28, from CHF1.4635. The dollar jumped to CHF1.0800, its highest since Aug. 18, from CHF1.0670.

Two dealers in the region said they saw franc-selling orders under the name of the Swiss National Bank on the EBS trading platform. The central bank was bidding for euros at CHF1.49, far above the spot rate of CHF1.46, they said.

“I’ve been in the currency market for two decades, but this is my first time to see the SNB doing intervention in Asian time,” said one dealer.

The central bank has been talking down the franc, especially since Philipp Hildebrand became SNB president last month. It intervened several times last year, typically in the euro/franc cross.

Dealers in Asia said there was about $1 billion of franc-selling orders by short-term hedge funds, an unusually big amount, especially for a currency cross that seldom trades actively in Asian hours.

Euro/franc is “all over the shop–rumors of official buying interest,” said a dealer in Singapore. “It jumped two big figures in a nanosecond.”

At 0530 GMT, franc was off its lows, with the dollar at CHF1.0752 and the euro at CHF1.4735.

The dollar and euro were stronger against the yen as investors squared yen-long positions after steep gains overnight by the Japanese currency when investors fled risky assets amid stock falls and sovereign-credit worries. At 0530 GMT, the dollar was at Y89.65, down from Y88.94 Thursday in late New York, and the euro was at Y122.90 from Y122.20.

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