Swiss eschewing currency cap could hurt euro


BLOOMBERG BUSINESSWEEK: The struggles of the currency of the European Union could compound by the Swiss’ decision.

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BLOOMBERG BUSINESSWEEK: The struggles of the currency of the European Union could compound by the Swiss’ decision.

Soon after the Swiss National Bank unexpectedly ended its three-year policy of keeping the franc weaker than 1.20 per euro, bearish bets on Europe’s common currency soared. While setting a record low versus the franc yesterday, the euro also plunged 3.5 percent against a basket of 10 developed-nation peers, the most since its 1999 debut, and reached an 11-year low against the dollar today.

The SNB’s decision removes a key pillar of support for the euro, boosting the odds that its recent slide will accelerate. Companies from Goldman Sachs Group Inc. to Pacific Investment Management Co., the world’s biggest manager of active bond funds, have in recent days talked about the euro falling to parity with the dollar, a 14 percent decline from its current level.

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