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Switzerland Back on U.S. FX Watchlist; Franc Holds Near Highs

Vivien Lou Chen

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The Swiss franc hovered near its strongest levels since 2018 as the U.S. Treasury Department added Switzerland back to its currency watch list.

The U.S. Treasury urged Switzerland “to adjust its macroeconomic policies to more forcefully support domestic economic activity,” according to a report released late Monday in Washington. “Despite borrowing costs for the Swiss government being among the lowest in the world, fiscal policy remains underutilized, even within the constraints of Switzerland’s existing fiscal rules.”

The franc held steady at 0.9706 per dollar in early Asian trading on Tuesday following publication of the report, having climbed 0.2% on Monday. The Swiss currency is less than 1% away from the 15-month high it reached in late December as global unease helped spur investor demand for the haven currency.

The other countries on the Treasury’s monitoring list are China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia and Vietnam. It removed the tag of currency manipulator from China.

The Swiss franc joins the Canadian dollar and British pound as one of just three Group-of-10 currencies to gain versus the U.S. dollar in the past year. It has climbed more than 1%.

Switzerland met two of the three criteria in the Treasury’s report, having a material current account surplus and a significant bilateral trade surplus with the U.S. Switzerland previously was included on the list between October 2016 and October 2018.

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Mark Tannenbaum

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