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The Swiss franc soared against other major currencies Thursday after the Swiss National Bank scrapped its minimum exchange rate policy, which had been in place since 2011.
The franc jumped 16% against the euro CHFEUR, +16.68% to trade at €0.9599, while rising 14% against the dollar CHFUSD, +15.16% to $1.1207. The franc traded as high as €1.1702 at one point, breaking above parity to the euro.
The euro EURCHF, -14.30% fell to 1.0406 Swiss francs, after trading as high as 1.2014 francs earlier in the morning, according to FactSet data.
In a shock move Thursday morning, the Swiss central bank scrapped its minimum exchange rate of 1.20 Swiss francs a euro, which was introduced four years ago to protect Switzerland from the eurozone debt crisis. A very strong Swiss currency would have hurt the country’s exporters.
“The euro has depreciated considerably against the U.S. dollar and this, in turn, has caused the Swiss franc to weaken against the U.S. dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified,” the central bank said in a statement.
“The euro may try to break below $1.170, and we may have to consider a downside bias to $1.165,” said Suzuki. “I can expect investors will be trying to find attractive trading opportunities (for dip buying) as the euro tests its downside,” up to the beginning of next week.
The franc jumped 16% against the euro CHFEUR, +16.68% to trade at €0.9599, while rising 14% against the dollar CHFUSD, +15.16% to $1.1207. The franc traded as high as €1.1702 at one point, breaking above parity to the euro.
The euro EURCHF, -14.30% fell to 1.0406 Swiss francs, after trading as high as 1.2014 francs earlier in the morning, according to FactSet data.
In a shock move Thursday morning, the Swiss central bank scrapped its minimum exchange rate of 1.20 Swiss francs a euro, which was introduced four years ago to protect Switzerland from the eurozone debt crisis. A very strong Swiss currency would have hurt the country’s exporters.
“The euro has depreciated considerably against the U.S. dollar and this, in turn, has caused the Swiss franc to weaken against the U.S. dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified,” the central bank said in a statement.
“The euro may try to break below $1.170, and we may have to consider a downside bias to $1.165,” said Suzuki. “I can expect investors will be trying to find attractive trading opportunities (for dip buying) as the euro tests its downside,” up to the beginning of next week.
