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Swiss franc surges on rising Ukraine concerns

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Swiss franc surges on rising Ukraine concerns
Photo: Fabrice Coffrini/AFP
10:43 CET+01:00
Pity North American tourists visiting Switzerland: the American and Canadian dollars have dived again against the Swiss franc, which is assuming its safe have status in the wake of concerns about Ukraine.

The franc was worth almost $1.15 on currency trading markets on Thursday, its strongest level against the greenback since October 2011.

The Swiss currency was buying around 1.27 Canadian dollars after the Canuck buck reached parity with the franc as recently as August 2012.

Meanwhile, the euro has dipped under 1.22 francs in recent trading, as foreign exchange dealers consider the geopolitical risks of events in Ukraine, where the Russian-backed regime has been ousted.

Ukraine warned of thousands of Russian troops massing on its border, while separatists in Crimea are planning to hold a referendum on seceding from Ukraine this weekend.

The Swiss National Bank’s Thomas Jordan on the weekend said the central bank would defend the 1.20 euro-franc ceiling if concerns about Ukraine pushed the franc higher.

The SNB has maintained a cap on the Swiss currency since September 2011 after the franc almost reached parity with the euro and concerns were raised about the impact the strong franc would have on the Swiss economy, and in particular on exports.

The central bank has said it would only consider dropping its support for the ceiling if inflation becomes a problem, which does not appear to be an issue at the moment.

In February, the Swiss cost of living index dropped by 0.2 percent from the same month a year earlier.

All this makes visiting Switzerland an more expensive proposition for tourists from North America as their dollars buy less in the mountain country.

Also impacted are UN organizations in Geneva, which have budgets based in American dollars while expenses are paid out in francs.

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