The Swiss franc dropped today after the Swiss National Bank kept its monetary policy unchanged and reiterated the pledge to keep the cap of 1.20 francs per euro. The Swiss currency extended its bearish movement against the euro and halted the rally versus the US dollar.
The SNB said that it will continue to enforce the minimum exchange rate “with the utmost determination”. The central bank explained its stance:
The Swiss franc is still high and is weighing on the Swiss economy. For this reason, the SNB will not permit an appreciation of the Swiss franc, given the serious impact this would have on both prices and economic performance in Switzerland.
The Producer Price Index unexpectedly rose 0.5 percent in August, following the 0.3 percent drop in July. The positive data signaled that the Swiss economy fares relatively well, giving hope that the SNB may drop the ceiling in the future.
USD/CHF rose from 0.9368 to 0.9395 and EUR/CHF advanced from 1.2084 to 1.2116 as of 13:29 GMT today.
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