"The reasons behind the setting of the minimum exchange rate in September 2011 retain their validity"
- SNB Chairman Thomas Jordan
The Swiss National Bank will continue enforcing the cap it imposed on the nation's currency to stave off the recession and avoid the risk of deflation, the SNB Chairman Thomas Jordan said on Friday. However, the Swiss currency still remains highly valued and represents a burden for the economy. The bank was defending its 1.2 cap by selling francs against the basket of major currencies since Sep 6, 2011. As a result, the Franc weakened to 1.21 per single currency.
"The reasons behind the setting of the minimum exchange rate in September 2011 retain their validity," Chairman Thomas Jordan said on Friday. "The financial problems in many countries continue to provide a basis for potential safe-haven capital flows."
"This instrument has made a decisive contribution to stabilising the Swiss economy. The export industry is gaining ground again and the deflationary expectations that were threatening to take hold were checked," Jordan said.
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, tumbled 1.00 per cent to 6,508.66. The broader Swiss Performance Index fell 0.95 per cent to stand at 5,990.69.
© Dukascopy Bank SA