ZURICH: The Swiss franc fell further against the euro on Wednesday, trading at an 11-week low as moves by Switzerland's two biggest banks to pay negative interest rates on franc deposits made by rivals sapped appetite for the currency.
As part of measures to shield the franc from investors seeking a safe-haven from the euro zone debt crisis, the Swiss National Bank has kept its target rate for the three-month Libor at 0.00-0.025 percent.
Rock-bottom rates have made it difficult for banks to cover their costs of holding deposits.
On Monday, Credit Suisse and UBS announced they would levy negative credit charges and fees on high franc deposits in a bid to encourage customers to limit their holdings of the currency.
"Ever more negative Swiss money market rates further reduced the attractiveness of CHF longs. As a consequence and in comparably light trading EURCHF traded back above the 1.21 level," said UBS economist Reto Hunerwadel in a note.
By 0702 GMT, the franc was down 0.1 percent against the euro compared to the New York close to trade at 1.2139, having fallen to an 11-week low of 1.2153 at one point on Wednesday
Against the dollar, the franc rose 0.1 percent on the back of euro strength, with the single currency boosted by efforts to tackle the debt problems of Greece and Spain.
The franc has largely shadowed the euro since the SNB capped it at 1.20 to the single currency more than a year ago to stave off the threat of deflation and recession.
Inflation data due on Thursday is expected to show consumer prices were steady in November, according to a poll of analysts, after falling 0.2 percent year-on-year in October.
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