Swiss franc soars to record high versus dollar

The Swiss franc soared to a record high against the US dollar on Thursday and the yen gained broadly as fears the uprising in Libya could spill over to other oil producers made investors seek safety. The dollar tumbled after a surge in oil prices stoked worries about its impact on US consumer spending. Expectations the Federal Reserve would lag other major central banks in raising interest rates also pressured the currency.
The Swiss franc may extend gains should turmoil in the Middle East and Africa spread. Further strength in the yen could be limited, however, with the Japanese economy vulnerable to high oil prices and the risk of currency intervention by Japanese officials to protect exports. "If this unrest continues, I believe the Swiss franc will probably be the main beneficiary," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.
The dollar fell to a record low of 0.9234 Swiss franc on trading platform EBS, with losses accelerating after automatic sell orders were triggered below its previous record low of 0.9301 set at the end of last year. It last traded down 0.8 percent at 0.9256 franc.
The dollar has fallen nearly 4.8 percent against the franc in the last two weeks, its worst showing since June. Technical analysts said the US currency's break below 0.9309 franc, around major trendline support drawn from lows hit in 1995 and 2008, had opened the way to more losses. One-month implied dollar/Swiss volatility continued to pick up, trading around 11.20 percent on Thursday, although this was still well below levels of around 15 percent seen at the start of the euro zone debt crisis in April 2010.
The euro fell to 1.2706 francs, its lowest since January 13, and last traded down 0.4 percent at 1.2773. Brent crude oil leapt to its highest since August 2008 on concerns the unrest, which has cut more than a quarter of Libya's output, could spread to other major oil producers. Credit Suisse said an analysis of data since 1999 shows the US dollar, as measured by the Federal Reserve's major trade-weighed index, falls about 2.2 percent for every 10 percent rise in the oil price.
The euro hit a three-week high of $1.3822 on EBS and last traded up 0.3 percent at $1.3789. Some traders said offers above $1.3800 were likely related to the take-over of Genzyme Corp by French drugmaker Against a basket of major currencies, the dollar slumped to its lowest in three weeks at 76.991. The dollar was down 0.9 percent at 81.79 yen, after having hit 81.62 yen, the lowest since February 4.