Published: 11 Apr at 6 PM Tags: Euro, America, Eurozone, Cyprus, USA, Switzerland,
With the ups and downs of the Eurozone crisis urging investors to European safe-havens, the Swiss National Bank was forced to but a cap on a rapidly strengthening Franc back in September 2011.
By capping the currency the central bank hoped to protect the nation from deflation and recession.
However, if the Franc moves to rise beyond the cap the SNB is ready and willing to take preventative action â€“ even if it the result is its currency reserves becoming further engorged. When the Cyprus crisis rocked the Eurozone in March the SNBâ€™s foreign currency reserves swelled to 438.300 billion Swiss Francs, while concerns that the controversial bailout proposal put to Cyprus could be used as a template in other struggling Eurozone nations pushed the Franc up.
At the SNBâ€™s latest quarterly policy meeting reference was made to the dangers the ongoing fiscal concerns in the Eurozone pose to the Franc.
Today, Fritz Zurbruegg (a SNB board member) restated the central bankâ€™s commitment to protecting Switzerland
â€™s currency and keeping it trading at the minimum level of 1.20 Francs per Euro, the necessity of which was reinforced by recent Swiss inflation data.
Zurbruegg asserted: â€˜We are ready to intervene if necessary. This would mean we would build up further reserves.â€™ Zurbruegg added â€˜We are currently neither considering gold purchases or gold sales.â€™
At the close of 2012 the Swiss National Bank held gold worth almost 50.8 billion Swiss Francs â€“ roughly 10 per cent of the financial institutions total assets â€“ but some politicians are fighting to pass a proposal which would force the SNB to hold a fifth of its total assets in gold.
As of Thursday, 11th April 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1736, GBP USD exchange rate was 1.5387, and GBP CHF exchange rate was 1.4318.