Franc Erases Gains vs. Dollar & Yen as SNB Maintains Ceiling

The Swiss franc erased its earlier gains versus the US dollar and the Japanese yen after the Swiss National Bank maintained the ceiling for the currency. Surprisingly, the franc managed to gain on the euro despite the unfavorable news.
The SNB left the cap of 1.20 francs per euro unchanged at today’s policy meeting. The central bank said in the statement:

The Swiss franc is still high. An appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss economy. Consequently, the SNB will continue to enforce the minimum exchange rate with the utmost determination.

The central bank predicted that deflation will extend into the next year and will turn to inflation only in 2014. As for economic growth, the bank kept its projections unchanged: 1 percent for this year and 1–1.5 percent for the next.
USD/CHF was at 0.9262 as of 11:03 GMT today after it fell earlier from 0.9261 to 0.9245. CHF/JPY traded at about 89.98, following the jump from 89.85 to 90.31 — the strongest rate since April 4. At the same time, EUR/CHF declined from 1.2108 to 1.2093.

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