The Swiss National Bank on Tuesday stepped in to impose a ceiling on the exchange rate of the national currency, causing the franc to halt four straight days of gains and fall the most ever against the euro.
The action set the franc plunging as much as 8.7% and bringing it to its weakest level since July. Bloomberg reported that the central bank said it would defend the target with the “utmost determination.”
Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva, said in the report, “The SNB has set a line in the sand. This type of peg was not expected. We’ll continue to see demand for the franc, especially against the euro, given the rise in risks from both Europe and the global slowdown. How they defend this will be a very expensive strategy.”