The Swiss franc dropped sharply against the euro today as UBS AG announced that it is going to apply charges for financial institutions holding cash accounts. The currency advanced for the second day versus the US dollar and the Japanese yen.
UBS announced yesterday:
Due to the continued prevailing market situation affecting the Swiss franc, we have decided to take additional corrective actions. As a consequence, we will start applying a charge for credit balances maintained by financial institutions in their Swiss franc accounts with UBS in Zurich.
The announcement fueled speculations about negative interest rates in Switzerland and added to pressure on the franc.
The franc was vulnerable against the euro, which gained strength from positive news. At the same time, the dollar and the yen were weakened by expectations of accommodative policy from the central banks of the United States and Japan, allowing the franc to outperform the US and Japanese currencies.
EUR/CHF jumped from 1.2077 to 1.2125 as of 20:00 GMT today. At the same time, USD/CHF fell from 0.9332 to 0.9324, following the advance to 0.9367, and CHF/JPY went up from 88.18 to 88.42 after falling to 87.91.
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