Monday, 12 September 2011

Franc Considered Overvalued Even Pegged to Euro

The Swiss franc fell against other major currencies today as the Finance Minister Johann Schneider-Ammann said the currency is "vastly overrated" even after the central bank set the franc to the euro. The franc rose against the euro today.

The minister explained that he believes that the fair rate for the franc is the following:

There is a general understanding that the purchasing power parity is around 1.35 to 1.40 francs per euro. That's more or less accepted. 

According to the index of the Organization for Economic Cooperation and Development, the Swiss currency is still 35 percent above the right price against the euro.

The euro fell today on concerns about the debt crisis in the region, but the parity of the franc to the euro has not allowed the Swiss franc to benefit from the resulting demand for shelter. However, the Swiss currency rose against the euro, reaching the limits set by the Swiss National Bank.

USD/CHF closed today at 0.8835 after opening at 0.8754 and falling to 0.8706. CHF/JPY fell from 88.49 to 87.75. EUR/CHF closed at 1.2065, declining from the opening rate of 1.2151.

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