Swiss Keep Up Threat of Currency Intervention on Strong Francby
SNB's Zurbruegg says franc still significantly overvalued
Currency's strength is a challenge for the Swiss economy
Swiss National Bank policy maker Fritz Zurbruegg said the franc remains overvalued and repeated the central bank’s warning that it will sell the currency if needed to counteract threats to the economy.
“The Swiss economy is accustomed to dealing with difficult exchange-rate conditions and has demonstrated its versatility time and time again,” he said in a speech in Zurich. “However, the Swiss franc is particularly overvalued at the moment. The SNB’s current monetary policy reflects this challenging environment.”
While the Swiss currency has advanced about 10 percent against the euro since the SNB scrapped its cap of 1.20 in January, it has declined almost 4 percent in the past three months. Zurbruegg said the SNB’s negative interest rate and threat to sell francs if needed should, over time, weaken it further.
“If global economic growth continues at the same moderate pace, this will help mitigate the negative effects of the strong Swiss franc,” he said.
The policy maker also acknowledged that exporters, the tourist industry and retailers near the border had suffered since the central bank unexpectedly removed the currency ceiling. He said the SNB’s three-member Governing Board have discussed this with businesses, often in “very heated” meetings.