The Swiss franc fell to a three-week low versus the dollar as Philipp Hildebrand said he’ll stay on as central bank president and that he didn’t abuse his position after his wife traded the two currencies in August.
“I acted not only according to the rules, but also in an appropriate manner,” Hildebrand said today at a press conference in Zurich. Kashya Hildebrand spent 400,000 francs to buy $504,000 on Aug. 15, three weeks before the SNB capped the currency at 1.20 euros, according to a report by PricewaterhouseCoopers LLP that was released yesterday by the central bank.
“Hildebrand has clearly set out to fight these allegations tooth and nail but his opponents are unlikely to let this one slide,” said Elizabeth Gregory, a market strategist at Swissquote Bank SA in Geneva. “There’s likely to be a lot more pressure for him to step down, but for the franc, the impact should be limited. Most observers would agree that the euro floor has been in the national benefit so it’s unlikely to be challenged.”
The franc dropped 1.1 percent to 95.21 centimes per dollar at 4:12 p.m. London time, after falling to 95.29 centimes before the press conference began, the weakest since Dec. 15. The currency was little changed at 1.2183 per euro after declining to 1.2199 yesterday, the lowest since Dec. 29.
The Aug. 15 trade, which Kashya Hildebrand carried out without her husband’s knowledge, was described as “sensitive” by the investigators. The PricewaterhouseCoopers probe was commissioned by the SNB Bank Council, the central bank’s supervisory body, which made a statement on Dec. 23, exonerating Hildebrand and his family.
“I am not aware of any breach of laws. But I understand that the public is having some questions,” Hildebrand said at today’s press conference. He joined the central bank in 2003, becoming its youngest ever policy maker, and took over as president in January 2010.
Bank Sarasin & Cie. AG, a Basel, Switzerland-based private bank, said in a Jan. 3 statement it fired an employee who passed data on the Hildebrand family’s currency trades to Christoph Blocher, vice president of the Swiss People’s Party. Blocher last year called on Hildebrand to resign after the SNB’s currency transactions led to a record loss.
Switzerland’s currency weakened against 11 of its 16 major counterparts today, losing the most against the Taiwan dollar, U.S. dollar and Mexican peso. The franc will fall to 98 centimes per dollar by year-end, according to a Bloomberg survey.
The Swiss Trade Union Federation, the country’s largest umbrella organization for labor unions, said today the central bank should adjust the franc’s ceiling to 1.40 per euro to combat a “looming recession.”
The Swiss economy may fail to expand this year, with unemployment averaging 3.5 percent and consumer prices declining an annual 0.4 percent, the Bern-based group said in a statement on its website.
The “reasons for this gloomy outlook are the strongly overvalued franc, the worsening global economic development and waning purchasing power at home”, the group said.