After the Swiss frank breached a ceiling set by the country’s central bank last September, the bank’s interim chairman said that it would defend the currency. Markets are wondering just how far he will go.
Bloomberg reported late Thursday that Swiss National Bank (SNB) interim chairman, Thomas Jordan, who called the franc “very, very strong” in mid-March, has said that further measures to protect the currency would be taken “if there’s a worsening of the situation.”
The Swiss franc is more popular than the euro, and it shows. On Wednesday it breached a ceiling of 1.20 against the common currency that was set by the Swiss central bank on Sept. 6, and on Thursday it climbed again after a statement by Prime Minister Mariano Rajoy of Spain that his country faced “extreme difficulty” in the wake of a bond auction that barely achieved its minimum target range.
Investors have sought out the franc previously as worries over the euro dominated markets, and this time there is another factor: Jordan only acceded to the post of chairman in January, after the previous SNB chief, Philipp Hildebrand, was compelled to step down over a currency transaction by his wife. Investors will be testing Jordan to see how far he will go to protect the set value of the franc.