Dec. 10 (Bloomberg) -- The Swiss franc fell to a month-low against the euro on increased speculation the central bank won't raise interest rates this week.
The franc, the second-worst performer of the 16 major currencies tracked by Bloomberg in the past week, also declined as gains in stocks encouraged traders to resume riskier investments funded by borrowing in Switzerland. The Swiss National Bank will probably keep the benchmark three-month Libor target rate unchanged at 2.75 percent on Dec. 13, according to the median estimate of 28 economists surveyed by Bloomberg News.
``The consensus is pretty much for no change in Swiss rates,'' said Henrik Gullberg, a currency strategist in London at Calyon, the investment-banking division of Credit Agricole SA. ``In times of relatively high confidence in the markets, the franc will stay under pressure.''
Against the euro, the Swiss currency fell to 1.6595 by 5:41 p.m. in Zurich, the lowest since Nov. 8, from 1.6535 on Dec. 7. It was little changed against the dollar, at 1.1276. The franc may trade between 1.63 and 1.65 per euro for the rest of 2007, Gullberg said.
European stocks advanced, with the Dow Jones Stoxx 600 Index gaining 0.6 percent and the MSCI World Index adding 0.7 percent. The benchmark Swiss Market Index gained 1 percent.
European Union Monetary Affairs Commissioner Joaquin Almunia said wage demands sparked by rising energy costs may increase the risk of high inflation at a time of little or no economic growth.
`Spiral'
Second-round effects, such as higher wage increases to compensate for the rising price of oil, ``could set off an inflationary spiral,'' Almunia said in a speech in Madrid today. With that ``we could enter into a period of stagflation.''
ECB Governing Council member Erkki Liikanen also said he sees increasing ``upside'' risks to inflation.
read more:Swiss Franc Falls on Rate Outlook, Stock Gains Spur Carry Trade
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