Posted On: January 15, 2015
The Swiss franc rose 17 percent on Thursday morning to 1.02569 per euro, Bloomberg reported. The Swiss National Bank shook up global markets with its surprising decision to scrap the currency's cap against the euro. The franc also gained 16 percent to 87.66 centimes per U.S. dollar.
The central bank also decreased the interest rate of sight deposit account balances that top a given exemption threshold from minus 0.25 percent to minus 0.75 percent.
"Seemingly they've decided it's no longer tenable and they want to try and offset the pressure they've been under," Jeremy Stretch, head of foreign exchange strategy at Canadian Imperial Bank of Commerce in London, told Bloomberg. "They are just looking to ease policy and moving forward a more negative deposit rate as a possible defense line."
Swiss National Bank Chairman Thomas Jordan said that the decision to abandon the peg was well thought out and not a panic move, according to CNBC. He also noted that he expects the currency's value to ease into more sustainable rates.
The central bank initiated the cap in September 2011 in response to investors purchasing huge amounts of the currency as a safer foreign exchange option than the dollar or the euro.
Category: Industry News
Foreign Exchange Services for Business
With a focus on payment services, Western Union Business Solutions enables businesses of all sizes to send funds internationally through our global payment solutions.
See our available FX payment services