Swiss franc nears 5-week low on Greek debt deal

London

THE Swiss franc shed over one per cent against the dollar on Monday, dropping towards a five-week low as some of the Greece-related safety flows waned after a conditional loan extension for the bailed-out country was reached late last week.

Despite a last-minute deal achieved late on Friday, uncertainty remained high, leaving the euro under pressure against the dollar, the pound and the yen .

The losses in the safe-haven Swiss franc, though, were relatively big. The dollar was 1.25 per cent higher against the franc at 0.9515 francs while the euro was up 0.5 per cent at 1.07395 francs, not far from a five-week high of 1.08115 struck late on Friday. "The move in the Swiss franc is broadly in line with the overall pick up in risk appetite," said Peter Kinsella, currency strategist at Commerzbank.

"Clearly, they want to keep Greece in the eurozone and as a consequence some of the safe-haven plays are being unwound."

Eurozone ministers late on Friday agreed to extend Greece's financial rescue package by four months after weeks of difficult and often confusing negotiations that captivated markets.

The agreement removed the immediate threat of Greece's exit from the single currency bloc, but questions remained over whether the short-term extension will lead to a deal over how to keep Athens solvent.

The euro fell 0.7 per cent to US$1.1300 after rising to US$1.1430 on Friday in response to the Greek loan agreement. The euro shed 0.7 per cent against the yen to 134.65 yen, after a German IFO survey fell short of expectations.

The slightly disappointing German data, along with the uncertainty over Greece, kept investors wary about the euro.

Greece has to submit to the Eurogroup on Monday a list of reforms that it plans to implement during the remainder of the bailout period, which needs the approval from the troika comprised of the European Commission, the European Central Bank and the IMF. "There is still ambiguity as to what exactly this list is . . . So this deal is by no means done," said Adam Cole, head of G10 FX strategy at RBC Capital Markets, adding that the euro was weak as investors await the list.

The dollar rose against the yen to 119.20 yen after bouncing from a low of 118.30 on Friday, helped by a rise in US debt yields. REUTERS