24 Sep 2013
The Swiss National Bank defends its decision to maintain a floor under EUR/CHF
FXstreet.com (London) - Speaking yesterday, Swiss National Bank (SNB) chairman Thomas Jordan defended the CHF1.200 floor under the EUR/CHF rate as an “ indispensable tool” of Swiss monetary policy to limit downside risks.
The floor was placed under the Franc in September 2011 to limit any further strengthening as haven flows threatened to overheat the currency as a result of Eurozone volatility and the threat of protracted US debt ceiling negotiations.
Though the former at least has abated, and market risk appetite has increased considerably, the CHF1.200 level still represents a strong Franc, putting pressure on Swiss exporters.
SNB numbers show that it spent CHF188bn buying foreign currencies last year to defend the EUR/CHF floor. The SNB has balanced the economic damage of defending the floor against the damage caused to Swiss competitiveness by an overheating Franc.
Jordan has defended the policy implemented by his predecessor, Philipp Hildebrand, arguing that monetary policy can be used to damp cyclical fluctuations.
EUR/CHF currently trades at CHF1.2297.
The floor was placed under the Franc in September 2011 to limit any further strengthening as haven flows threatened to overheat the currency as a result of Eurozone volatility and the threat of protracted US debt ceiling negotiations.
Though the former at least has abated, and market risk appetite has increased considerably, the CHF1.200 level still represents a strong Franc, putting pressure on Swiss exporters.
SNB numbers show that it spent CHF188bn buying foreign currencies last year to defend the EUR/CHF floor. The SNB has balanced the economic damage of defending the floor against the damage caused to Swiss competitiveness by an overheating Franc.
Jordan has defended the policy implemented by his predecessor, Philipp Hildebrand, arguing that monetary policy can be used to damp cyclical fluctuations.
EUR/CHF currently trades at CHF1.2297.