(Corrects sixth paragraph to show the franc breached the euro cap only once.)
The Swiss franc fell as the government named interim chairman Thomas Jordan the full-time head of the Swiss National Bank, ending concern a new leader would ease the policy of limiting the currency’s strength.
The franc declined the most in a week against the euro after Jordan was formally appointed president at a government meeting today in Bern. The SNB imposed a cap of 1.20 francs per euro in September to protect exporters as investors sought the currency as a haven from Europe’s debt crisis.
“Jordan’s ascension is the official removal of any uncertainty regarding policy continuity,” said Peter Rosenstreich, chief foreign-exchange strategist at Swissquote Bank SA in Geneva. “However, it doesn’t eliminate the core issue, which is investors value the perceived safety of the franc over the euro. Demand for the franc should continue to create problems for the SNB.”
The franc depreciated 0.1 percent to 1.2012 per euro at 4:03 p.m. London time after weakening as much as 0.2 percent, the most since April 11. The currency was little changed at 91.60 centimes per dollar.
Jordan, 49, became interim chairman of the SNB on Jan. 9. He replaced Philipp Hildebrand, who stepped down that day after it was revealed his wife exchanged $504,000 of francs into dollars in August, shortly before the cap was imposed.
The franc briefly strengthened beyond 1.20 per euro on April 5.
“I stand for the continuity of the SNB monetary policy,” Jordan said a press briefing. “The franc limit is absolutely necessary in the current situation. The whole governing board is fully behind this limit which we continue to defend regardless of what happens on the financial markets.”
Jordan declined to comment on a possible increase to the franc’s cap.
The Swiss government also named Fritz Zurbruegg, head of the Federal Finance Administration, to the SNB’s governing board, while Jean-Pierre Danthine was named deputy president.
The currency floor will be lifted to 1.25 francs per euros over the next quarter, according to Barclays Plc.
“The franc remains very expensive relative to the SNB’s, and our, judgment of fair value,” Paul Robinson, global head of foreign-exchange research in London, wrote today in a note to clients. “Raising the floor makes sense, both to loosen the monetary stance and tactically to ensure the floor continues to meet little challenge. We expect an increase to 1.25 over the next quarter.”
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