The currency that just won't quit chart for more currency data. By Charles Riley, staff reporter

NEW YORK (CNNMoney) -- The Swiss franc, one of the world's strongest currencies, has been on a tear in recent months, and is now flirting with a new all time high against the U.S. dollar.

The Swiss currency has spiked more than 20% against the dollar since June, when Europe's sovereign debt crisis sparked a flood of money into the franc amid worries about the unfolding crisis.

The currency might continue to move sharply higher, due to concerns that violence in Egypt might destabilize the region.

"What is driving the flow is a safe-haven bid, and the Swiss franc has been bought aggressively due to the situation in Cairo," said Kathy Lien, director of currency research for Global Forex Trading.

That's the same way traders usually talk about the U.S. dollar. But that might be old news. The market is treating the franc like a modern-day Maginot Line against geopolitical upheaval.

"The dollar used to be a safe haven," said Lien. "And still is to some degree, but not like the franc."

What has changed? For one, investors are skittish about the amount of debt that is being carried by the U.S. federal government. If rating agencies were to downgrade U.S. debt, the implications would be enormous for the dollar.

And the U.S. economy just isn't recovering quickly enough for investors to feel confident. "There is still an extreme amount of spare capacity in the U.S. economy," Lien said.

But why Switzerland?

"The Swiss franc is seen as in independent island in the middle of very stormy seas," said Brian Dolan, chief currency strategist at

Switzerland, unlike many other countries in Europe, has a relatively low debt level, and its economic recovery has outpaced that of the United States.

"They didn't have quite as large a downturn there. Whereas the U.S. saw 5% to 6% contractions in GDP, the Swiss only had 3%," said Dolan.

But having a strong currency isn't always a good thing. For one, Swiss products will become more expensive for other countries to buy. And that has the Swiss government very worried.

In the wake of the global recession, the Swiss central bank has intervened in the currency market, hoping to stem the franc's prolonged rally and protect the country's export business.

"The Swiss National Bank has been quite vocal about the rise," said Dolan. "And yet the Swiss franc has continued to strengthen. The global factors are simply too big for the central bank to overcome."

The intervention was ineffective. And according to Lien, the franc has already risen to a level that is harming the country's export business.

Strangely enough, some Swiss export items are still super-hot at the moment. Among the bright spots: watches.

On Thursday, the Swiss Watch Industry Federation reported annual sales growth of 45% for 2010, and expressed confidence in the strength of the market, citing rapid growth in Asia. In December, sales spiked 71% in China, and 59% in Hong Kong.

And generally speaking, the watch industry did well in countries that have emerged strongly from the global downturn. As long as those places remain hot, demand for Rolex watches might overpower a strengthening franc. To top of page

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