The Swiss franc declined as Switzerland signaled that it may take steps to further weaken then nation’s currency, which is already subdued by its peg to the euro.
The Swiss National Bank set the ceiling for the franc at 1.20 francs per euro on September 6. The SNB was trying to weaken the Swiss currency for several years, but it was the first time when the central bank was able to contain Swissie’s gains for a prolonged time.
The SNB also suggested that it may boost the cap further in case it would view the strength of the franc as excessive. And the Swiss central bank was continuously stating that it considers the currency overvalued. It’s no surprise that the government decided to support the central bank and signaled that it’s going to “examine the feasibility of supporting measures”. The SNB itself stated that it would sell “unlimited quantities” of the currency to trim the franc’s appreciation.
USD/CHF closed at 0.9209, rising from 0.9156, while EUR/CHF closed at 1.2334, slightly above its opening level of 1.2325. CHF/JPY was down from 84.80 to 84.54.
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