BERN: Fears that the euro would drastically lose ground against the Swiss franc following Sunday’s Greek referendum have been largely quieted despite some volatility in the foreign exchange markets.
The euro weakened from CHF1.044 to just under CHF1.036 on Sunday night as news of the Greek ‘No’ vote to European Union austerity demands filtered through. But the exchange rate soon bounced back to above CHF1.04 and was flirting with levels seen at the end of last week. The Greek rejection of economic reforms that would underpin future loans has raised the spectre of emergency funding drying up and a possible exit of Greece from the euro. That in turn has increased demand for safe haven currencies such as the Swiss franc.
Last week, Greece defaulted on a €1.5 billion (CHF1.6 billion) loan repayment to the International Monetary Fund. Swiss exporters and hoteliers have already been suffering lost profits since the Swiss National Bank (SNB) in January ended its artificial capping of the euro-franc exchange rate at CHF1.20. Each further weakening of the euro against the franc increases the chance of Swiss job losses, insolvencies and relocation of production abroad.
In an interview with Le Temps newspaper on Monday morning, Swiss Economics Minister Johann Schneider-Ammann revealed his concerns over the Greek referendum. “The pressure on the franc is perhaps going to intensify,” he said. “Uncertainty about Greece remains very high, underpinning demand for the Swiss franc,” Bank Sarasin forex expert Ursina Kubli told swissinfo.ch. “We will continue to face this in the coming weeks.”
