(Adds SNB and analyst comment)
LONDON, Sept 30 The safe-haven Swiss franc fell
sharply on Friday, having earlier hit a two-month high on
worries about the European banking sector, with some traders
speculating that the Swiss central bank was intervening to cap
the currency's strength.
The euro had hit a two-month low of 1.08125 francs
earlier in the London session, as concerns about the health of
Deutsche Bank weighed on the single currency and undermined risk
appetite across global markets.
But it rebounded to hit a one-week high of 1.09135 francs at
0958 GMT, rising 0.4 percent in a matter of minutes. It was last
trading at 1.0875 francs, still up 0.3 percent on the day, while
the single currency was broadly weaker against most major
The Swiss National Bank which often intervenes by selling
francs and buying the euro in order to cap the currency's
strength, declined to comment on market talk of currency
But traders and analysts were not convinced, given the sharp
move in the London session.
"The SNB has made it clear that it considers intervention as
one of its policy tools and this is likely to limit upside
potential for the Swiss franc," said Jane Foley, senior currency
strategist at Rabobank.
The dollar also climbed 1 percent to a 9-day high of 0.9770
francs, having hit a one-month low on Thursday. It was
last trading at 0.9745 francs.
The Swiss franc was bolstered by expectations that Middle
Eastern investment houses could pull out money of the United
States and into alternative safe-haven liquid currencies like
Those expectations got a boost after the U.S. Congress voted
overwhelmingly on Wednesday to approve legislation that will
allow the families of those killed in the Sept. 11, 2001 attacks
on the United States to seek damages from the Saudi government.
(Reporting by Anirban Nag; Editing by)