BLBG:Franc Retreats From Records After Unexpected Rate Cut to Near Zero by SNB
The Swiss central bank unexpectedly cut interest rates and said it will increase the supply of francs to money markets in an effort to stem a surge in the “massively overvalued” currency.
The Swiss National Bank said it has lowered its target for three-month Libor to “as close to zero as possible” from 0.25 percent. It will also expand banks’ sight deposits to 80 billion Swiss francs ($104 billion) from 30 billion francs and said it will repurchase outstanding SNB Bills.
“The current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland,” the SNB said in an e-mailed statement from Zurich today. Policy makers, led by Philipp Hildebrand, are “keeping a close watch on developments on the foreign-exchange market and will take further measures against the strength of the Swiss franc if necessary.”
The Swiss currency depreciated 1.6 percent after the announcement and traded at 1.103 versus the euro at 9:30 a.m. in Zurich after reaching a record 1.07958 earlier today. Versus the dollar it traded at 77.43 centimes.
-- Editors: Simone Meier, Matthew Brockett
To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
