Swiss Franc Rises Despite SNB’s Attempts to Contain Rally

The Swiss franc gained today even though the nation’s central bank did not change its stance at today’s policy meeting, reiterating the pledge to do everything that is necessary to keep the cap on the currency.
The Swiss National Bank kept its monetary policy unchanged today and issued rather dovish statement. Regarding the global economy, the SNB said that “global economic recovery remains hesitant” and “downside risks remain substantial”. The central bank added that “weaker global economic activity would also be detrimental to economic growth in Switzerland”. As a result, the SNB announced:

The Swiss National Bank (SNB) is maintaining its minimum exchange rate of CHF 1.20 per euro. The Swiss franc is still high. With a 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.

The Swissie rallied, ignoring the efforts of policy makers to weaken the currency. The most likely reason for the rally is risk aversions caused by geopolitical tensions in Iraq and Ukraine.
USD/CHF went down from 0.8957 to 0.8929, and EUR/CHF dropped from 1.2177 to 1.2168 as of 11:12 GMT today after rising to the daily high of 1.2186. CHF/JPY advanced from 113.78 to 114.05.

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