This time it seems to work, yet they are just rumors. A European bank trader in Singapore said the Swiss National Bank (SNB) is buying into the futures market. And in any case, the SNB intends to take other measures to curb the appreciation of the franc.
So after the big flight in the asian bags, the Swiss currency has started to lose ground. It fell 0,9% to $0,7971 in London this morning. Against the single currency it decreased by 0,7%: to 1,1474 francs per euro. One franc is worth 0,9617 yen, compared with 0,9695 yesterday. "The market appears to be reluctant to be tested by the SNB," said Jane Foley, an analyst at Rabobank International. “But the central bank will have to find a solution soon: it cannot keep making empty threats otherwise the market will lose patience and start pushing the franc again.”
Swiss Finance Minister Eveline Widmer-Schlumpfs said yesterday she was "concerned" about the strength of the franc and that the government would back any steps the Swiss National Bank would take to weaken the currency. The central bank said politicians are considering several options including a temporary peg to the euro.
The new possible measures of the Central Institute and the support of the Executive have therefore restored confidence in the markets which are starting to bring down the most popular safe haven asset in Europe. The franc has strengthened by 11,6% this year: the best performance among the 10 currencies of advanced nations, according to data from Bloomberg.
Yesterday the National Bank had decided to increase demand deposits from 120 to 200 billion francs, but the market had not responded in the way hoped and the Swiss currency continued to grow. It was the third intervention by the SNB on the markets in the last 15 days.
