(Bloomberg)--The Swiss franc strengthened to its highest level against the dollar in 2 1/2 years on speculation a sluggish recovery will prompt the Federal Reserve to increase stimulus for the economy, boosting demand for safety. The Swiss currency appreciated versus 15 of its 16 most- traded peers after the Federal Open Market Committee said yesterday in Washington that it’s “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.” The franc traded through parity with the dollar for the second consecutive day.

“The Swiss franc is significantly below parity, and we expect the dollar will continue to decline,” said Marcus Hettinger, a currency strategist at Credit Suisse Group AG in Zurich. “Yesterdays FOMC statement left open the door for further quantitative easing, meaning U.S. interest rates will stay at very low levels for a very long time.” The franc strengthened as much as 1.2 percent against the dollar to 98.39 centimes, the most since a record 97.86 centimes on March 18, 2008, and traded at 98.69 centimes as of 5 p.m. in London. The Swiss currency was little changed at 1.3208 per euro.

Investors traditionally buy the franc during times of economic turmoil because of the perceived stability of Switzerland’s economy. The nation’s trade surplus frees it from dependence on overseas capital. The franc strengthened to a record 1.2766 per euro on Sept. 8.

Franc ‘Driver’

The Fed, which also left its main interest rate unchanged yesterday, next meets on Nov. 2-Nov. 3. “The announcement from the Fed is the most significant driver for the franc,” said Lee Hardman, a currency strategist at Bank of Tokyo Mitsubishi UFJ Ltd., in London. “It has led to a broad dollar sell-off as the Fed moved from a neutral to an easing bias, which increases the likelihood of increased quantitative easing at the November meeting.”

The Swiss currency climbed 4.8 percent this year against a basket of currencies, according to Bloomberg Correlation- Weighted Currency Indexes.

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.