Business
Thursday January 15, 2015
What kept for three years
The Swiss National Bank (SNB) Thursday rocked financial markets by eliminating a barrier keeping exchange for three years, leading to the currency to drill the limit of 1.20 francs per euro and generate fears about the Swiss economy dependent on exports.
A few days ago very, SNB officials described the minimum rate exchange, established during the financial crisis of 2011 to prevent a rise of the franc curb economic recovery , as a key element of the monetary policy of the bank.
The unexpected decision, which led to the franco climbing almost 30% against the euro in the first five minutes of trading, he met a week before meeting of the European Central Bank where expects the ECB announce a bond purchase program could force the SNB to massive sales of francs to euros to defend their limits.
“The measure of SNB today is a tsunami for the export industry and tourism, and finally for the whole nation”, said Nick Hayek, CEO of the Swiss watch brand Swatch UHR.VX.
By removing the cap limit the exchange of currency units per euro 1.20, the SNB sought to deter the entry of new flows to CHF , lowering interest rate key, which was already negative, by 0.5 percentage points to take -0.75 percent.
The SNB pledged to “stay active in the foreign exchange market to influence monetary conditions “.
Earlier this month, SNB President Thomas Jordan, had described the exchange barrier as” absolutely central “. The bank vice president Jean-Pierre Danthine just said Monday that the exchange limit would remain as a landmark of the monetary policy of the bank.
“In my opinion, this damages the confidence in the Bank Swiss national who has always been saying that it can maintain the minimum exchange rate “, said Alessandro Bee, an economist at Swiss bank Sarasin. “I see great risk in this,” he said
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