LONDON: The euro fell to its lowest in nearly 21 months against the Swiss franc on Thursday amid speculation that the European Central Bank will ease monetary policy in coming months, possibly by quantitative easing.
The euro fell to 1.20595 francs on trading platform EBS, its lowest since early December 2012 and down 0.1 percent on the day. Before the latest speculation about the ECB, the Swiss franc had been rising due to safe-haven inflows amid renewed tensions between Russia and Ukraine.
A sustained drop in the euro could test the Swiss National Bank's three-year old pledge to cap the franc at 1.20 per euro.
"The likelihood of the ECB taking further measures is increasing, should long-term inflation expectations fall further," said Esther Reichelt, currency strategist at Commerzbank.
"This is exerting downward pressure on euro/Swiss franc. So long as such speculation persists, it will be difficult for it to recover on a sustained basis."
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