(Bloomberg) -- Amundi SA has turned positive on the Swiss franc, betting that the currency will benefit from an uptick in geopolitical strife.
Europe’s biggest asset manager is now slightly overweight the currency, marking a shift from its stance earlier this year when it was underweight, Andreas Koenig, Amundi’s head of global FX, said in an interview. The franc could rise to as strong as 0.93 per euro by the end of the year — a potential gain of about 1% — and will bump between that level and 0.96 through December. The franc traded at 0.9394 per euro at 12:43 p.m. in Zurich.
“I think it’s a good point to have francs as insurance, especially in the environment of this massive escalation in geopolitics,” Koenig said, adding that he had picked up the currency when it weakened to around 0.96. “But you normally don’t stand against the central bank and so we’re only slightly overweight at the moment.”
The firm bet earlier this year that the franc would weaken to parity versus the euro after Switzerland’s central bank stopped intervening to prop up the domestic currency.
But now, he’s willing to buy the safe-haven franc along with the yen, given its scope to gain if the conflict in the Middle East worsens, or if US elections raise economic or political uncertainties, Koenig said.
Still, easing by the Swiss National Bank complicates the calculus for franc gains. Buying the Swiss currency is at odds with a pledge by the central bank that it will continue to cut the country’s already-low interest rates to contain the franc’s strength as inflation has fallen to its slowest pace in more than three years. The SNB has also suggested it may intervene directly to restrain further gains.
“Without the central bank, I would be outright long,” Koenig said.
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