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Swiss franc ploughs ahead vs dollar

ZURICH: The Swiss franc inexorably ploughed ahead on Friday, breaking below 1.64 to the dollar and below 1.60 to the euro, as it continued to ride high in the wake of Thursday's surprisingly aggressively Swiss National Bank tightening.

The central bank's move shook the Swiss currency out of a lethargic run against the euro, which had seen it trade between 1.6045 and 1.6082 from the start of the year until Thursday. The dollar last traded below 1.64 francs on February 24.

The SNB raised its target range for the three-month London Interbank Offered Rate to 2.50-3.50 percent from 1.75-2.75 percent on Thursday, while targeting the midpoint of the range -- around 3.00 percent -- compared with the upper end of the old range -- 2.50 percent or slightly higher.

Dealers said the SNB's rate rise drove home the point that the central bank felt the franc was getting too weak, certainly in view of accelerating economic growth.

While markets viewed the move partly as an effort to decouple the franc from a weakish euro, it also had the side effect of pulling the single currency up against the dollar.

Dealers said the gains reflected in part the view that SNB's hawkish rate rise was based on buoyant prospects for the euro zone economy as well. The European Union is the key export market for Switzerland.

Economists said on Friday they expected the Swiss economy to continue to power ahead undeterred by the SNB's aggressive move on the back of strong exports and brisk domestic demand.

UBS Warburg on Friday revised its GDP forecast for 2000 up to 2.6 percent from 2.1 percent and to 2.1 percent in 2001 from 1.8 percent, expecting Europe to underpin the Swiss economy.

Swiss Economics Minister Pascal Couchepin underscored the economy's strength by announcing he expected the unemployment rate to drop to 2.2 percent for the month of March.

The dollar slipped to 1.6391/96 francs from an early 1.6464/74 and 1.6498/08 late on Thursday.

The euro eased to 1.5915/18 francs from an early 1.6004/09 and 1.6006/11 late on Thursday.-Reuters