Investors Flock To Switzerland As Middle East Tension Escalates

by Philip Morton, Investors Offshore.com

04 April 2002

Finance experts have suggested that the recent rise in the value of the Swiss franc could be down to growing unrest in the Middle East.

Speaking earlier this week, senior economist for UBS, Hans-Peter Hausheer explained:

'Clearly the Swiss franc has risen sharply against the euro and the United States dollar in the last few days. It's part of a historical trend, whereby gold and the Swiss franc are always considered to be safe havens by investors when there are world events that threaten to involve the US or the European Union.'

However, he added that: 'It's a bit senseless to place your faith in the Swiss franc, because these days Switzerland is in the same position as other European nations,' presumably referring to the country's recent accession to the United Nations as a full member.

However, there are other possible explanations for the Swiss currency's seemingly sudden rise in popularity. Several leading Swiss economists believe that the currency's increase in value has not been as meteoric as it appears, but that its strength represents a general rise since 2000.

In an interview with the Swissinfo news service on Wednesday, Matthias Bucher, economist with Zurich Cantonal Bank, offered the following explanation:

'A lot of the increase is to do with the fact that it's no longer possible to diversify and to trade in French francs or German marks - now it's just the euro and the Swiss franc,' he suggested.

However, he went on to say that: 'Nevertheless, I would still expect the Swiss franc to appreciate dramatically in the case of renewed unrest or terrorist attacks.'

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