Swiss franc hits record highs

LONDON: The euro fell more than one percent on the day to hit a record low of 1.1957 francs on trading platform EBS, with traders saying losses had accelerated as stop loss orders were triggered on the break below 1.1970 francs.

It failed to break lower, however, with traders saying there were bids at 1.1950 francs.

The Swiss franc hit a record high against the euro on Thursday, shrugging off central bank concerns about franc strength and buoyed by demand for the safe haven currency due to growing concerns about euro zone debt.

One-month euro, Swiss implied volatility traded above 12.0 percent, up from around 11.2 percent on Wednesday. One-month risk reversals revealed an increasing demand for bets on euro losses versus the Swiss franc.

"It feels like momentum in euro, Swiss franc is accelerating to the downside," said Kathleen Brooks, currency strategist at FOREX.com.

Implied volatility in euro, Swiss franc spines higher perceive risk in the options market of further weakness in the euro, Swiss franc spot price.

The Swiss National Bank left interest rates unchanged, stressing risks to the economy from a strong franc, with Chairman Philipp Hildebrand expressing concerns about exporters' margins.

But analysts said intervention looked unlikely given that Switzerland was not facing deflation, adding that authorities would have a battle to prevent currency strength with risk aversion sparking demand for francs and weighing on the euro.

"It doesn't look like the SNB will intervene, and if they did they would be trampled on in the current risk-averse environment," Brooks added.

SNB board member Jean-Pierre Danthine said the Swiss economy was doing well enough that there was no reason at the moment for interventions or extraordinary measures.

Between March 2009 and June 2010 the SNB intervened in foreign exchange markets to stave off deflationary risks.

The Swiss franc also gained against the dollar, which was down 0.5 percent at 0.8491 francs

Copyright Reuters, 2011