The Swiss franc fell against the US dollar and erased gains versus the euro after the Swiss National Bank kept its monetary policy unchanged today, maintaining the cap on the currency.
The SNB kept its main interest rate near zero and the ceiling at 1.20 francs per euro. The central bank said in the statement:
With the three-month Libor close to zero, the minimum exchange rate continues to be the right tool to avoid an undesirable tightening of monetary conditions in the event of renewed upward pressure on the Swiss franc.
It is not likely that the bank will lift the cap anytime soon as it mentioned that the “inflation forecast was adjusted downwards slightly”, meaning that inflation pressure is nowhere near the level that warrants changing the current policy.
USD/CHF rose from 0.8863 to 0.8880 as of 14:03 GMT today. EUR/CHF traded near the opening level of 1.2217.
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