The euro and Swiss franc regained some lost ground on Thursday, as markets reacted positively to the Swiss central bank's support for Credit Suisse, ahead of a difficult meeting for ECB rate setters.
The euro was up 0.4% at $1.06225 having lost 1.4% a day earlier, its biggest percentage fall in six months, as the focus of fears about the banking sector spread across the Atlantic from the collapsed U.S.-based Silicon Valley Bank to the much larger Credit Suisse.
Some calm was restored to markets after the Swiss lender (CSGN.S) said on Thursday it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence, after its shares on Wednesday plunged as much as 30%.
That helped the Swiss franc to strengthen, and the dollar dipped 0.92% against the franc , to 0.9248, reversing some of its 2.15% surge on Wednesday - the largest daily gain since 2015.
“It’s like walking through a forest at night, and if you’re nervous and you hear a sound which could be a squirrel or it could be a bear, you react as if it’s a bear.”
But the news of the Swiss National Bank's support for Credit Suisse did calm the mood somewhat.
"Now, Credit Suisse has the clout of (the) Swiss National Bank covering its back, which is a central bank that doesn't mess around in the time of crisis," said Matt Simpson, senior market analyst at City Index.
