IN A PRESS release issued earlier today the Swiss National Bank, which conducts Switzerland’s monetary policy as an independent central bank, announced that it will enforce a minimum exchange rate of CHF 1.20 to the Euro:
“The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.
The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.
Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.”
The Euro, which had been trading around CHF 1.10 before the announcement, shot up to 1.2024 afterwards.
Those who have purchased property in Cyprus with the help of CHF mortgages will welcome the announcement. Many have seen their repayments soaring in recent years and fear that they could lose their home in the UK if they are pursued by the banks for the money that they owe.