The Swiss franc has risen to a seven-month high against the dollar, bucking a trend which saw the US currency gain ground against its other major competitors.

Analysts say speculators are buying francs following Tuesday's inflation data which showed that prices shot up in April by 1.1 per cent - the largest annual rise in several months. They say the sharp increase has put paid to a cut in interest rates.

"People were surprised by the Swiss inflation data... which seems to indicate the Swiss National Bank has less room to cut rates," said Francesca Fornasari, a currency strategist at Lehman Brothers.

The Central Bank had indicated recently that it was prepared to reduce rates to bring down the value of the currency, which is threatening the competitiveness of Swiss exports.

The franc was trading at SFr1.60 to the dollar on Wednesday, after touching lows of more than SFr1.80 last year. It also climbed against the euro to SFr1.45.

The dollar bounced back from recent falls against the euro and yen on Tuesday, following a rally on Wall Street and stronger than expected consumer confidence in the United States. The European currency clawed some ground back on Wednesday though, trading at 0.91 euro to the dollar.

swissinfo with agencies

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