EUR/CHF is currently seeing a minor uptick with no fundamental newsflow behind the move as EUR/CHF breaks out of its tight range ahead of SNB's Zurbrugg's speech at 1730GMT
Nov. 20 (Bloomberg) -- The Swiss National Bank will defend its cap of 1.20 per euro on the franc and won’t hesitate to enact supplementary measures, Governing Board Member Fritz Zurbruegg said.
“The SNB will continue to enforce the minimum exchange rate with the utmost determination,” Zurbruegg said in the text of a speech for delivery in Geneva today, reiterating the stance taken by the central bank at its most recent policy decision. “To this end, it is prepared to purchase foreign exchange in unlimited quantities and to take further measures immediately if required.”
The franc hit a 26-month high versus the euro this week as investors bet the European Central Bank will enact still more stimulus to shore up inflation. The SNB set the 1.20 limit three years ago after the franc nearly shot to parity with the euro amid Europe’s sovereign debt crisis. SNB policy makers have said a negative interest rate is in their toolkit.
The SNB’s balance sheet has expanded by more than a third in the past three years because of currency interventions to enforce the cap. Nearly half its foreign exchange holdings are in euros and a quarter in dollars.
“We see further potential in Asia as we move forward and it will not surprise you to hear that we see China playing an increasingly important role here,” Zurbruegg said, explaining that Chinese central government bonds were of interest due to risk diversification.
On Nov. 30 Swiss voters will decide on a measure that would require the SNB to hold at least 20 percent of its assets in gold and never sell any. While the initiators argue it would preserve national wealth, the government and the central bank oppose it, saying it would impede fulfillment of the price stability mandate.
According to a poll published by gfs.bern yesterday, 38 percent are seen backing the measure, while 47 percent are seen against it, with 15 percent still undecided.
“The SNB considers the initiative to be unnecessary and harmful,” Zurbruegg said today.
it was quiet the same with kiwi, from .84 wheeler was threatening of central bank intervention to weaker the nzd, market kept ignoring up to .88, few weeks later its down to .77
