SNB Sets Ceiling Exchange Rate For Franc - 6.9.2011
The Swiss National Bank has finally pegged the national currency to the euro, setting a minimum exchange rate for the pair at 1.2 francs per euro. The Bank explained in a statement that “The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.” The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the national currency. “With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20” the bank said. The SNB will enforce this minimum rate with the utmost determination and is “prepared to buy foreign currency in unlimited quantities.” Finally, the statement concluded that if economic situation requires, “SNB will take further measures.” The Swiss franc weakened sharply against the euro and the dollar following the announcement. The euro soared to as high as 1.2192 francs before retreating slightly, while the greenback rose to 0.8571.