Swiss Franc Hits Parity With Dollar for First Time Since 2019 - BLOOMBERG
MAY 14, 2022
BY Emily Graffeo, Robert Fullem and Libby Cherry
(Bloomberg) -- The Swiss franc weakened to briefly reach parity with the greenback for the first time since late 2019, as the dollar’s role as the preferred haven trade grows amid turmoil in global markets.
The dollar-franc pair rose as much as 0.6% to 1.0002 on Thursday. The Swiss currency has weakened more than 8% against its US counterpart in 2022.
Risk aversion usually favors the Swiss franc, but the dollar has emerged as the key haven in a more inflationary environment. Traders have been eyeing the rift between the Swiss National Bank, seen as a laggard when it comes to raising interest rates, and the more hawkish Federal Reserve, leaving the franc struggling in recent weeks. Meantime, a gauge of the dollar’s strength is hovering near a two-year high, garnering further support amid turbulence in digital assets and geopolitical tensions.
“The move in USDCHF was largely due to the fact that the downturn in global risk appetite today wasn’t purely isolated to Europe,” said Simon Harvey, head of foreign-exchange analysis at Monex Europe. “This left the dollar as a cleaner haven expression.”
The SNB has allowed the Swiss franc to strengthen in recent months as a means to combat imported inflation.
The bullish trend for the franc against an equally-weighed basket of the euro and the dollar over the last five years “has come to an abrupt end,” said Lee Hardman, MUFG Bank currency strategist. Franc weakness has coincided with building expectations for faster policy tightening from the European Central Bank and the Fed, he said.