Swiss franc gains ground against the dollar

Fears of an economic slowdown are pushing the dollar lower Keystone

The Swiss franc has advanced to its strongest position against the US dollar for more than four months to trade at around SFr1.68.

This content was published on December 18, 2000 - 08:33

The dollar has fallen from 14-year highs against the franc over concerns that the slowdown in the US economy could turn into a full-blown recession.

Recent volatility on the tech-heavy Nasdaq and Dow Jones stock markets, as well as speculation of a US interest rate cut to fuel growth is weighing on the dollar.

Financial markets expect the US Federal Reserve to signal its willingness to cut rates, when policymakers meet on Tuesday. Analysts say fears of a slowdown are becoming so acute that they are likely to overtake concerns about inflation.

The euro is also moving up against the dollar with many traders expecting it to consolidate above the level of 90 cents.

The strong level of the dollar has been a major concern to European importers as the cost of goods coming from the US has soared. Aviation companies such as Swissair will also welcome a fall in the value of the dollar as fuel is priced in the US currency.

A stronger franc is also good news for Swiss holidaymakers in the United States.

On the other hand, Switzerland's exporters have enjoyed a boom in sales to the US as the exchange rate made Swiss goods less expensive.

Experts say that once a currency correction is underway, the value of a currency can move very quickly. Some even say that the euro could return to parity with the dollar in the coming weeks.

But for now at least, the dollar continues to trade at strong, if lower, levels against the currencies of its major competitors.

by Michael Hollingdale

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