The Swiss franc weakened to parity with the dollar for the first time since late 2019, as the preferred haven trade grows amid turmoil in global markets.
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On Thursday, the dollar-franc pair rose as much as 0.6% to 1.0002 The Swiss currency has weakened more than 8% against its US counterpart in 2022.
The dollar has emerged as the key haven in a more inflationary environment, as a risk aversion usually favors the Swiss franc. The franc struggled in recent weeks due to a rift between the Swiss National Bank, seen as a laggard when it comes to raising interest rates and the more hawkish Federal Reserve. The dollar's strength is close to a two-year high, garnering further support amid turbulence in digital assets and geopolitical tensions.
Simon Harvey, head of foreign-exchange analysis at Monex Europe said that the move in USDCHF was largely due to the fact that the downturn in global risk appetite wasn't purely isolated to Europe. The dollar was left as a cleaner haven expression. The Swiss franc has been strengthened in recent months as a means to combat imported inflation.
Lee Hardman, currency strategist at the MUFG Bank, said the bullish trend for the franc against an equally-weighed basket of the euro and the dollar has come to an abrupt end over the last five years. He said that franc weakness has coincided with expectations for a tighter policy from the European Central Bank and the Fed.
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