THEY DID IT: Swiss National Bank Makes Epic Intervention Move, Sending The Swiss Franc Plunging
The long rumored Swiss Franc peg has arrived...
The Swiss National Bank is tired of the surging Franc, and is taking intervention to the next level.
Here's the press release the SNB just put out (hat tip to Robert Sinn for linking to it):
The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss
economy and carries the risk of a deflationary development.
The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained
weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF
exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum
rate with the utmost determination and is prepared to buy foreign currency in unlimited
quantities.
Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to
weaken over time. If the economic outlook and deflationary risks so require, the SNB will
take further measures.
economy and carries the risk of a deflationary development.
The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained
weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF
exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum
rate with the utmost determination and is prepared to buy foreign currency in unlimited
quantities.
Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to
weaken over time. If the economic outlook and deflationary risks so require, the SNB will
take further measures.
This kind of floor/peg has been speculated on in recent weeks, but this is still an unbelievable move that will require ongoing Franc printing by the SNB to work.
Here's a look at the dollar against the Franc, via FinViz. Epic 8% jump.
The ECB has put out this brief statement:
The Governing Council of the European Central Bank has been informed by the Swiss National Bank about its decision to “no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20.”
The Governing Council takes note of this decision, which has been taken by the Swiss National Bank under its own responsibility.
DOWNLOADED FROM:
http://www.businessinsider.com/wow-swiss-national-bank-takes-intervention-to-a-new-level-franc-plunges-2011-9
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