Friday, August 12, 2011

Swiss National Bank Floats Possibility of Franc Peg

Swiss Central Bank Vice President Thomas Jordan said in an interview that the central bank could consider a host of options to contains the franc’s recent appreciation including a temporary peg to the euro.

“Any temporary measures to influence the exchange rate are permissible under our mandate as long as these are consistent with long-term price stability,” Jordan said in an interview with Tages-Anzeiger earlier today.

In recent months the franc has gained in popularity as a safe haven as the turmoil continues in the U.S. and Eurozone economies. Since April, the swiss franc has gained 27 percent on the euro and is nearing parity. By pegging the franc to the euro, demand for the franc as a safe haven would be diminished potentially slowing the franc’s rate of appreciation.

Source: Bloomberg

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