6th September 2011
The Swiss National Bank (SNB) has acted to curb the strength of its currency by pegging it to the euro.
In a statement released today, the central bank said it will establish a minimum exchange rate of 1.20 francs to the euro and buy foreign currency in "unlimited quantities" if necessary.
"The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy," the institution added.
It also pledged to enforce the ceiling placed on the exchange rate with the "utmost determination" and take further measures if the economic outlook demands them.
The move, which is the latest attempt by the SNB to weaken the currency after its soaring price badly damaged the nation's exporters, had an immediate effect on forex trading.
Bloomberg reported that the value of the franc dropped by at least 7.8 per cent against all 16 of the most active currencies it monitors, with the largest fall seen against the Norwegian krone.
Posted by Andrew Henderson
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