Swiss National Bank Remains Committed to Defending Currency
Speaking at the Swiss American Chamber of Commerce today, interim SNB President Thomas Jordan noted that expectations were low that the Swiss economy would recover to a rosier pace of expansion. In the coming quarters, Jordan noted that the pace of growth was forecasted to remain “weakly” as the Swiss economy continues to suffer from Eurozone fallout. The debt crisis in the Eurozone has sapped much of the trade support the region does for Swiss manufacturers. Meanwhile an appreciating franc continues to hurt the competitiveness of domestic goods with trade partners like the United States. The country’s currency, the Swiss franc, has been propelled by investor yearning for safe haven assets – as they exit out of Euro based investments.
Jordan also noted that economic activity in the Swiss economy had visibly slowed in the third three months of 2011, as export volume declined – adding that the “situation remains very challenging for Switzerland.”
However, central bankers remain steadfast in their mission to “defending the minimum exchange rate of 1.20 francs per euro”, according to President Jordan. Policymakers “will not tolerate any trading below the minimum rate”.
Traders are taking note of the final comment with most already seeing the Swiss economy suffering – confirmed by lowered official growth forecasts by the SNB late last year. As a result, the Swiss franc declined, to trade as low as 1.2096 against the Euro.