Thursday, June 14, 2012

SNB pledges to keep defending upper CHF limit

    The central bank of Switzerland will continue to defend its upper limit on the Swiss franc's exchange rate against the euro and also keep its borrowing target unchanged, as expected.
     The Swiss National Bank (SNB) said the Swiss franc was still high and it would not tolerate further appreciation as this would have a serious impact on both prices and the Swiss economy. The bank said it was ready to buy foreign currency in "unlimited quantities" to defend the maximum exchange rate of 1.20 francs per euro.

    The SNB said there was no risk of inflation in Switzerland for the foreseeable future and its target range for three-month Swiss franc Libor remains at 0-0.25 percent.
    It expects the global economy to only recover slowly as momentum in advanced countries remains subdued while emerging economies continue to grow strongly.
    "The risks for the Swiss economic situation remain exceptionally high. The uncertainty about future developments in the euro area has again risen. If global activity proves disappointing or the turmoil on the financial markets increase, downside risks will again emerge for the economy and price stability in Switzerland," the SNB said.
   Turmoil and speculation about a break up of the euro area has intensified the pressure on the Swiss franc as investors seek safe haven, with the SNB's foreign currency reserves continuing to grow.


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