ZURICH: The Swiss franc dipped against the euro on Tuesday as the single currency recovered some ground following concerns about the precedent set by the Cyprus bailout.
The euro had tumbled across the board on Monday after the head of the Eurogroup, Jeroen Dijsselbloem, said the rescue plan agreed for Cyprus will serve as a model for dealing with future banking crises. He later appeared to backtrack, saying Cyprus was a specific case with exceptional challenges.
Commerzbank analyst Lutz Karpowitz said the markets would stay on edge until Cyprus banks reopened: "News from the Mediterranean island will keep the market in its grasp today given that their is no macro data on the release calendar."
The franc was down 0.2 percent against the euro to trade at 1.2201 by 0701 GMT compared to the New York close.
The franc was little changed against the dollar at 0.9477.
The safe-haven franc had risen against the euro in recent weeks after an inconclusive election in Italy and due to the crisis over wrangling by Cyprus to rescue its banking sector.
The Swiss National Bank will keep the lid on the franc at 1.20 per euro as long as the euro zone remains unstable, vice-chairman Jean-Pierre Danthine said on Monday.
"More of the same from SNB vice president Danthine. The latest comments by SNB top officials show no signs of increased nervousness whatsoever," said UBS economist Reto Huenerwadel.
The SNB imposed the cap on the franc in September 2011 to prevent deflation and a recession, after investors seeking sanctuary from the euro zone crisis pushed the currency's value up by a quarter in just a few months.
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