UBS Group AG, the largest Swiss bank, said its wealthiest clients will be attracted to U.S. dollars after Switzerland roiled markets by scrapping the franc’s cap.

Private-banking customers are concerned a stronger franc will hurt Switzerland’s economy and the businesses they own, Simon Smiles, Zurich-based chief investment officer for ultra- high-net-worth individuals at UBS, said on Friday in an interview. Clients worldwide have yet to decide on whether to change currency allocations, he said. The bank cut its growth forecast for Switzerland and predicts the country will slip into deflation this year.

“We did six client group calls one after another as soon as the news came out yesterday,” Smiles said in an interview in Singapore today. “Broadly, the allocation toward dollars and people’s preference toward U.S. assets has increased over the last two to three quarters. The uncertainty associated with this move in Switzerland will incrementally increase that preference for U.S. assets.”

The Swiss National Bank stunned markets on Thursday by abolishing the franc’s three year-old cap of 1.20 per euro, causing the currency to soar as much as 41 percent against the common currency. The central bank also made its deposit rate more negative, underscoring Europe’s divergence with the U.S., where the Federal Reserve is considering an increase in borrowing costs.

‘Strongest Story’

Asian shares dropped while bond yields in Japan and Australia fell to records today as investors flocked to haven assets. Thirty-year U.S. debt yields declined to an all-time low 2.35 percent yesterday.

“The U.S. remains very much the safest and strongest story in terms of economic growth, corporate earnings and potentially U.S. dollar appreciation,” said Smiles, who advises clients who each have more than 50 million francs ($57 million) in investable assets at UBS.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 11 percent last year, the most since the gauge’s inception of Dec. 31, 2004. The index was little changed today as of 7:23 a.m. in London.

The franc weakened 4.8 percent today to 1.02459 per euro after surging as much as 41 percent yesterday.

Forecasts Cut

UBS lowered its forecast for Switzerland’s economic growth in 2015 to 0.5 percent, from 1.8 percent, because of the “substantial impact” of a stronger franc on the economy, Global Chief Investment Officer Mark Haefele wrote in a note to clients dated Jan. 15. It cut next year’s prediction to 1.1 percent, from 1.7 percent, according to the note.

The bank cut its 2015 inflation rate forecast to a consumer price decline of 0.6 percent, from an earlier estimate of a 0.2 percent gain, according to the note. The estimates are subject to “substantial uncertainty,” depending on how the franc trades against the euro, Haefele wrote.

“If I look back at everything we have seen in the last three or four years in terms of how instantaneous the business reaction was, there was more interest than around that of the U.S. fiscal cliff, and issues with Greece,” Smiles said. “To put it in context it was a major, major event.”