The Swiss franc, a currency that has provided refuge to investors since the escalation of the debt crisis in the eurozone, could become the next safe haven that will no longer be, warn analysts from Societe Generale bank, as reported by business media.
The bank forecasts that the exchange rate of the Swiss franc could weaken by nearly 10 percent against the euro by mid-2014, as systemic risks related to the eurozone are diminishing. Currently, the euro is trading at 1.229 Swiss francs.
– The systemic risk in the eurozone has eased, and further progress will be made by addressing the solvency issues of eurozone countries, so the Swiss franc should lose its appeal as an alternative investment – states Societe Generale.
However, there is a risk that the Swiss National Bank could raise interest rates next year to neutralize the rise in property prices in the country, which could limit the decline in the value of the Swiss currency, they note at the bank.
Switzerland has been experiencing a rise in property prices since the onset of the global financial crisis in 2008, driven by exceptionally low interest rates.
The bank expects demand for the Swiss franc to remain unchanged over the next 12 months.
Alongside the franc, gold is also a traditional refuge for capital in uncertain economic times. However, its price has been falling for five consecutive days, marking the longest period of decline in the last three months, a consequence of uncertainty regarding when the Fed will begin to taper its monetary stimulus to the U.S. economy. Generally, monetary stimulus positively affects the price of gold.
Today, the price of an ounce fell by 0.8 percent or $10.4, to $1,292. Since the beginning of the year, the price of gold is down 23 percent.
