ZURICH: The Swiss franc ticked lower against the dollar on Wednesday as a sell-off in mining companies weighed on European equities and dented risk appetite, pulling the safe haven greenback off the previous session's 8-week low against the franc.
Supporters of the franc stayed on the sidelines after Swiss National Bank Vice Chairman Jean-Pierre Danthine said in a speech on Tuesday evening that a credit boom that had pushed up real estate prices could easily turn into a crash.
Increased leverage, high property prices and elevated risk appetite had left the Swiss economy highly vulnerable, and caution and responsibility would be required to deal with it effectively, Danthine said.
The franc continues to take its lead from the euro in trading against other units, as it has largely done since the SNB imposed a 1.20 per euro cap in September 2011 to fend off a recession and deflation.
Some observers said producer price data allowing investors to gauge inflation differentials between Switzerland and the euro zone could help put a fair value on the franc.
"The bigger the inflation gap the bigger (and quicker) the adjustments in the real effective Swiss franc exchange rates to fair value from its current overvalued levels," said UBS economist Reto Huenerwadel.
"With the March release of European producer prices still outstanding the inflation differential at the producer level points towards a convergence at low levels. If sustained, this is to take pressure off the euro-franc going forward."
The franc traded at 1.2148 per euro, little changed from Tuesday's New York close.
The franc was down 0.1 percent at 0.9228 per dollar.
Forex traders remained firmly focused on the yen, which weakened against major currencies as solid US company earnings and data indicating ongoing US monetary stimulus boosted risk appetite. The franc gained 0.3 percent against the Japanese unit to 106.29 yen per franc, closing on last week's 19-month high.
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