Record Drop of Franc After SNB Pegs Currency to Euro
The franc plunged today, posting the biggest decline against the euro in all times, after the Swiss National Bank decided to set limit of franc’s appreciation versus the euro.
Switzerland’s central bank decided to act as continuous appreciation of the Swiss currency “poses an acute threat to the Swiss economy and carries the risk of a deflationary development”. As a result, the SNB announced today:
The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.
The Bank thinks that even the set rate is too high and the currency should be weakened more in the future.
USD/CHF jumped as high as 0.8509 as of 11:26 GMT today, following the surge from 0.7871 to 0.8573. EUR/CHF soared at 1.2044 after earlier it climbed from 1.1096 to 1.2190.
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Earlier News About the Swiss Franc:
- Franc Jumps as US Payrolls Show Zero Growth (2011-09-02)
- Franc Rallies as SNB Doesn't Intervene (2011-09-01)
- Franc Falls as Bernanke Improves Sentiment on Markets (2011-08-26)
- Franc Gains as Markets Return to Risk Aversion (2011-08-24)
- Franc Falls for Second Day on Risk Sentiment (2011-08-24)