Wednesday, 7 September 2011

Record Drop of Franc After SNB Pegs Currency to Euro

The franc fell today, recording the biggest drop against the euro at all times, after the Swiss National Bank decided to limit the appreciation of the franc against the euro.
Swiss central bank decided to act as a continuing appreciation of the Swiss currency, "poses a serious threat to the Swiss economy and carries the risk of deflation of development." As a result, the Swiss National Bank 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 believes that even the rate set too high and the currency weakened further 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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