ZURICH: The Swiss franc weakened a hair against the dollar, alongside the euro, as investors remained ill at ease about the euro zone's debt crisis, with a rise in Spain's borrowing costs in particular focus on Tuesday.
Safe-haven buying spurred the franc to near parity with the euro last August, threatening to tip Switzerland into recession. To lessen the risk of deflation and contraction, the Swiss National Bank (SNB) set a cap of 1.20 per euro on the franc.
The franc has been trading just shy of that mark versus the euro in recent weeks, as the euro zone crisis churns on and spectre of Greece exiting the union rises.
But it has weakened slightly since SNB Chairman Thomas Jordan said in a newspaper interview at the weekend that emergency measures - including capital controls - were being drawn up in case the currency bloc collapsed.
"Much rather than a short term reaction to the latest FX strains, however, we view similar comments as part of ongoing political discussions in the matter likely to accompany us for some time to come," said UBS economist Reto Huenerwadel.
"To make a long story short: Nothing in the latest comments by SNB president Jordan hints at a changed SNB position on the lower boundary in EURCHF and their willingness to stick to it for longer," Huenerwadel also said.
The franc was down 0.07 percent against the dollar to trade at 0.9588 by 0548 GMT compared to Monday's New York close.
The franc was flat against the euro at 1.2014.
Despite fears of a recession, so far the Alpine economy has escaped contraction and growth of close to 1 percent is expected for 2012.
The UBS consumption indicator for April rose to 1.41 points from a revised 1.20 points in March, data showed on Tuesday, with the increase primarily to brightening consumer sentiment and improvements in the retail sector.