ZURICH: The Swiss franc was little moved on Thursday against both the dollar and the euro as the single currency stabilised after falling to a two-year low against the greenback last week.
The franc has largely been trading in tandem with the single currency since the Swiss National Bank set a cap of 1.20 francs per euro last September, in an attempt to prevent a recession and deflation.
Swiss trade data out on Thursday showed that the policy is helping support exports, which rose by a 1.8 percent in June to 16.886 billion Swiss francs ($17.24 billion).
"The defence of the exchange rate limit to the euro should have an increasingly positive impact on foreign trade," said Bernd Hartmann, head of investment research at VP Bank.
"Even though the 1.20 per euro rate seems too low for many exporters, the franc has continuously fallen in the past months against the dollar and the pound. That restores some competitiveness to export firms at least outside of the eurozone."
Swiss Economy Minister Johann Schneider Ammann was quoted as saying on Wednesday the franc was still overvalued versus the euro and thanked the SNB for defending the 1.20 limit.
The franc was flat against the dollar to trade at 0.9772 by 0639 GMT compared to the New York close and hovered at 1.2011 to the euro.
Concerns about the euro zone debt crisis had pushed the single currency to a two-year low of $1.2162 last week, with the franc also dragged to a 19-month trough of 0.9873 on Friday.
"It seems that the euro-dollar exchange rate has moved from a downwards to a sideways mode. Neither the euro zone crisis, nor US monetary policy - up until now significant drivers - are delivering more than short-term triggers," Commerzbank analysts wrote in a note.
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