By: Barbara Zigah
The U.S. Dollar struck a record low against the safe haven Swiss Franc and investors expect that the greenback will remain under heavy pressure as the violence in the Middle East and Northern Africa escalates.
Investors are concerned that the social unrest might spread through Saudi Arabia or Algeria, or other oil-rich countries, causing major disruptions to oil production and effectively harming the worldwide economic recovery. The Swiss Franc is seen as the “safest” of all the safe haven currencies, especially during times of high uncertainty, and some strategist see no end in sight to the current unrest.
As reported at 2:59 p.m. (JST) in Tokyo, the U.S. Dollar was trading at 0.9285 Swiss Francs, down .5% from late trading in New York yesterday; earlier in the session it had slipped to 0.9274 Swiss Francs before edging back slightly.
Pressure on the U.S. Dollar is also coming from the Euro, drawing support from investor speculation that an interest rate hike later in the year will give those currencies a yield advantage. Hawkish comments from two ECB officials have increased speculation that the ECB will use an interest rate hike to combat rising inflation. The common currency was holding steady against the U.S. Dollar at $1.3766, a .1% gain from late New York trading yesterday.