FRANKFURT: The euro ruined to an 11 year low after the Swiss National Bank roiled financial markets by unexpectedly scrapping the franc’s cap against the European shared currency.
The euro fell 0.9 per cent to $1.1535 in New York and touched $1.1535, the weakest level since November 2003. The single currency rose 0.1 per cent to 135.24 yen, having lost 3.6 per cent this week.
The franc dropped 1.3 per cent to 98.84 centimes per euro after surging to a record 85.172 yesterday. Switzerland’s currency fell 2.5 per cent to 86.08 centimes per dollar.
The dollar extended gains against a basket of peers even after the cost of living in the US declined by the most in six years. A gauge of foreign exchange volatility climbed to the highest in more than a year. Brazil’s real led gains among major currencies.
The euro headed for its biggest weekly loss versus the yen since May 2011 as a report confirmed consumer prices in the region also fell in December, strengthening the case for the European Central Bank (ECB) to buy government bonds.
Brian Daingerfield, a currency strategist at Royal Bank of Scotland (RBS) Securities unit in Stamford said one of the reactions from the SNB decision was they knew the ECB will be embarking on monetary policy expansion. The overarching fundamentals of the euro story remain in place to push the euro lower.
The US currency against 10 major peers climbed 0.4 per cent to 1,140.53 to trim its first weekly loss in more than a month to 0.1 per cent. It closed at 1,147.54 on January 8, the highest in data going back to 2004.
