Swiss franc strengthens against US dollar

The Swiss franc on Tuesday continued its recent gains against the US dollar. Analysts say the franc is benefiting from doubts about whether the US economy can keep up its strong performance.

The Swiss franc on Tuesday continued its recent gains against the US dollar. Analysts say the franc is benefiting from doubts about whether the US economy can keep up its strong performance, as well as from growing optimism about the European economy.

Marcus Allenspach, an economist at Cantrade private bank, says he expects the franc to strengthen further against the US dollar in the coming days for two reasons.

“First, we have seen the weakness of the US market on Monday because people now believe the federal reserve is going to hike interest rates,” he said. “The second point is that we have seen some upbeat comments in Europe. There is still the discussion of the German tax proposal too – the removal of the tax burden on corporate restructurings. Now people are saying that the Schroeder government is speeding up the process of economic reform. The Swiss franc is benefiting from that.”

As the Zurich stock exchange re-opened for business, no problems were reported with the millennium bug, but the market does seem to have a bit of a hangover and has been suffering steep losses.

Analysts say that was expected after Wall Street, Paris and Frankfurt all saw profit-taking when they re-opened on Monday.

From staff and wire reports.