ZURICH (Reuters) – The euro fell to its lowest level against the Swiss franc in more than eight years on Thursday, as markets bet on early interest rate cuts from the European Central Bank after dovish commentary and soft economic data.
The euro fell to 0.9404 francs against the franc at 1122 GMT, its lowest level since the Swiss National Bank discontinued its minimum exchange rate policy in January 2015.
The SNB, which is due to announce its latest interest rate decision on Dec. 14, did not immediately respond to a request for comment.
“Perhaps market participants are starting to price in more aggressive interest rate cuts by the ECB next year,” said Stefan Gerlach, chief economist at EFG Bank in Zurich, who expects the SNB to keep its interest rates unchanged at 1.75% next week.
The franc’s rise could make the SNB consider relaunching interventions in the currency markets to weaken the safe-haven currency, but Gerlach thought this unlikely.
“That would mean adding to the foreign exchange reserves and blow up the balance sheet further,” he said. “Thus, I think they will want to avoid that.”
(Reporting by John Revill in Zurich and Samuel Indyk in London; Editing by Alison Williams)
