The Swiss franc fell against the euro today, pushed down by yesterday’s comments of Fritz Zurbruegg, Governing Board member of the Swiss National Bank. The currency was flat versus the US dollar and even managed to gain on the Japanese yen.
Zurbruegg said yesterday that the elevated exchanged rate makes it necessary for the central bank to keep the cap on the currency:
The value of the Swiss franc is still high. With the three-month Libor close to zero, the minimum exchange rate continues to be the right tool to avoid an undesirable tightening of monetary conditions in the event of renewed upward pressure on the Swiss franc.
In the end of the speech he concluded:
The success of the SNB cannot be measured in terms of our annual results but by whether we fulfil our mandate, which is to ensure price stability while taking account of the development of the economy. In order to fulfil this task, the minimum exchange rate remains necessary for the foreseeable future.
Previously, the International Monetary Fund backed the necessity of the currency cap, driving the Swiss currency down. Surprisingly enough, the franc was not particularly weak today after the Zurbruegg’s comments and even rose against the yen, which was soft despite supportive fundamentals.
USD/CHF closed flat at 0.8864 today. EUR/CHF advanced from 1.2180 to 1.2192. CHF/JPY rose from 115.22 to 115.94.
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