ZURICH: The Swiss franc rose against the dollar on Monday, taking its lead from the euro which firmed after a regional election win for Spain's prime minister boosted hopes his austerity drive could clear the way for Madrid to seek international aid.
Prime Minister Mariano Rajoy's victory in elections in his home region of Galicia on Sunday was seen as a boost for his austerity drive removing a hurdle to meeting the conditions that have been set for the country to receive international aid.
But uncertainty over when Spain would request a bailout to drive down the cost of its borrowings remained, and traders expect the euro to stay in a range.
The franc has shadowed the euro closely in its movements against other currencies since the Swiss National Bank imposed a 1.20 per euro cap on the soaring franc to stave of recession and deflation.
A slight fall in sight deposits reported on Monday indicated the SNB is not having to intervene heavily in the markets to defend the cap on the franc.
Analysts don't expect a shift in the franc cap any time soon, a view supported at the weekend by comments from SNB vice-chairman Jean-Pierre Danthine who, despite saying the currency is still "unusually strong", gave no hint of further measures to rein in the franc.
"Reiterating the SNB's view whereby the CHF vs. the EUR remains overvalued at 1.20 and in light of the challenging situation for Swiss exporters the minimum exchange rate in EURCHF at 1.20 seems here to stay for longer," said UBS economist Reto Huenerwadel in a note.
The franc rose 0.2 percent against the dollar compared to Friday's New York close to trade at 0.9268 francs per dollar by 0709 GMT.
The franc was steady against the euro at 1.2091 francs per euro.
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