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The dollar fell versus a basket of currencies of major U.S. trading partners as investors sought higher-yielding assets.
The franc briefly fell against the dollar and euro before a government briefing in Bern, then rallied as Finance Minister Eveline Widmer-Schlumpf said any decision on a target for the currency is up to the Swiss National Bank, not politicians. The franc surged earlier after the central bank refrained from pegging it to the euro or adopting a target.
Swiss Economy Minister Johann Schneider-Ammann said the government will use 2 billion francs ($2.5 billion) to boost the economy in the face of the currency’s strength. He and Widmer- Schlumpf spoke at the briefing in Bern.
The Swiss central bank said earlier it will raise banks’ sight deposits, cash available for immediate withdrawal, to 200 billion francs from 120 billion francs, continue to repurchase outstanding SNB bills and use foreign-exchange swap transactions, it said in an e-mailed statement from Zurich.
The Thomson Reuters/Jefferies CRB Index of raw materials climbed 1 percent. The Standard & Poor’s 500 Index rose as much as 1.3 percent before erasing gains.
“The cautious action by the SNB compared to market expectations of bold intervention suggests wariness to another negative PR initiative that could be branded as an expensive failure,” said Lena Komileva, Group-of-10 strategy head at Brown Brothers Harriman & Co. in London.
The dollar sell-off comes after foreign-exchange traders had reduced bets against the dollar in the week ended Aug. 9 by the most on record as global growth concerns sent demand for U.S. Treasuries soaring.
“The basic position was long risk-correlated currencies, short dollars, and that position was cut substantially -- and now they are tentatively getting bought back,” Citigroup’s Englander said.
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