Swiss Franc Drops; SNB Has No Comment

NEW YORK (Dow Jones)--The Swiss franc dropped sharply in intraday trade against the euro and dollar amid fears the Swiss National Bank might intervene in currency markets.

The Swiss National Bank has declined to comment.

The euro abruptly swept up from the CHF1.5145 area to hit an intraday high of CHF1.5201. It has since settled back at around CHF1.5158.

The dollar gained from CHF1.0407 to CHF1.0466. It too has declined some since and is trading near CHF1.0439.

Within the last 24 hours, analysts said the Swiss franc's trade-weighted index, which is comprised of the euro and dollar, was close to the level at which the SNB last intervened in late June.

The SNB has been intervening periodically in the foreign exchange market since March to contain advances in the Swiss Franc to protect the country's exporters and fight deflation.

Late last month, with the euro trading at around CHF1.52, SNB member Thomas Jordan said the central bank "won't accept further strengthening of the Swiss franc."

Traders always watch carefully when the euro sinks to the CHF1.5150 area as that is widely seen as the edge of the SNB's tolerance.

Currency strategists added that there isn't a lot of conviction in the market, but there is a lot of anxiety. This is causing significant currency-market volatility.

While the euro's move was significant compared to intraday action, on a day-to-day basis, it is not notably higher. Wednesday, it was at CHF1.5166 late in the New York session.

Thursday morning in New York, the euro was at $1.4531 from $1.4551 late Wednesday, according to EBS via CQG. The dollar was at Y91.90 from Y92.08. The euro was at Y133.56 from Y133.90. The U.K. pound was at $1.6635 from $1.6535, and the dollar was at CHF1.0429 from CHF1.0425.

The euro also fell to a session low against the dollar, reversing an earlier rally to a fresh nine-month high of $1.4608.

The common currency fell as low as $1.4502.

Other than volatility and uncertainty, strategists said the euro may have come under pressure on concerns that the SNB could buy dollars in a potential intervention, affecting the euro exchange rate against the dollar.

Back in June, traders saw the SNB buying dollars on the Electronic Broking System, or EBS.