"The most gold-like currency": Morgan Stanley expects franc to rise 17% against the dollar

Morgan Stanley strategists expect that the Swiss franc may strengthen by 17% against the dollar - it will be supported by growing investor confidence in the status of this currency as a protective asset amid uncertainty in U.S. economic policy, writes Bloomberg. In the bank's "bearish scenario" the rate could reach an all-time high of 0.64 Swiss francs per dollar against about 0.777 on February 23.

Morgan Stanley analysts led by David Adams called the franc "the most gold-like safe haven currency," pointing to the low inflation, financial strength and reliability of Swiss assets, as well as the best history of outperformance during market shocks. According to Adams, the currency is undervalued and has the potential to appreciate faster than markets are pricing in.

Betting on the strengthening of the franc is also strengthened by hedge funds: according to the U.S. Futures Trading Commission (CFTC), they formed the largest bet on the growth of the Swiss currency since June, moving from a net short position, which they held a week earlier, notes Bloomberg.

Last month, the franc rose to a maximum of more than a decade against both the dollar and the euro, recalls the agency. Despite the risk of possible intervention of the Swiss National Bank to contain deflationary pressures, many economists believe that the regulator is not yet ready to actively oppose the strengthening of the franc, Bloomberg points out.

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