Swiss franc largely unchanged after inflation data

ZURICH, Jan 4 (Reuters) - The Swiss franc was largely unchanged against the dollar and euro on Thursday, trading close to a near seven-year low against the euro after the release of data showing Swiss inflation inched up in December as expected.

Swiss consumer prices were overall unchanged compared to November for a year-on-year increase of 0.6 percent, the Federal Statistics Office said. In November the yearly rate was 0.5 percent.

"The data does not change much for the franc," said Calyon analyst Henrik Gullberg. "The weaker trend in the franc still seems to be very much a yield play and this trend will probably be sustained until the SNB expresses some serious concerns about the external value of the franc, i.e. opens the door for a more aggressive policy stance."

With Switzerland's interest rates among the lowest in the world, investors use the franc as a funding currency for investments in higher-yielding currencies such as the euro in so-called carry trades.

Swiss rate hike expectations have been pared back in recent weeks after the Swiss National Bank slashed its inflation forecast for 2007 and the year thereafter when it raised its benchmark interest rate to 2.00 percent.

By 0653 GMT, the franc was down 0.01 percent against the euro at 1.6148 per euro, after hitting a new low of 1.6154 on Wednesday, the lowest since March 2000.

The franc was down 0.03 percent against the dollar at 1.2266 per dollar.

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