Swiss franc strengthens on inflation, interest rate worries

Story link: Swiss franc strengthens on inflation, interest rate worries

While the European Central Bank kept interest rates where they were when it met on Wednesday, a change in the tone of comments accompanying the announcement of the decision ahs led some analysts to believe that the ECB could raise eurozone interest rates before the year is over. The remarks by the ECB president stressed that he has concerns about price stability and the possibility of inflation.

The euro was up 1.2 percent to $1.2129 in relation to the US dollar on Thursday and it gained 0.8 percent to £0.6844 versus sterling.

Sterling, meanwhile, was down by 0.3 percent to $1.7725 against the US dollar. The Bank of England also kept interest rates steady, but there are some concerns about more slowing of the growth of the gross domestic product in the UK in the third quarter after industrial production figures were weaker than had been expected.

The Swiss franc benefited Thursday from the abundant speculation about the possibility of inflation rates rising worldwide as investors sought out the Swiss currency, regarded as a relatively safe investment in times of upheaval.

The euro lost 0.1 percent to SFr1.5469 versus the Swiss franc, while sterling lost 0.8 percent to SFr1.2598 and the US dollar was down 1.1 percent to SFr1.2748 versus the Swiss currency.

The dollar was put under pressure during the day when the Venezuelan central bank moved to put about half of its foreign reserves into the yen, the euro, and the renminbi, selling off dollars to do so.