CHF to EUR Exchange Rate declines on Swiss National Bank rate decision

The Swiss Franc dipped lower against the Euro on Thursday after the Swiss National Bank kept interest rates on hold and said that it will maintain its exchange rate pegging to the single currency in order to avoid a tightening of monetary conditions.

The SNB kept rates unchanged at 0% and reiterated that it would continue to enforce the 1.20 per Euro limit with unlimited monetary interventions if necessary and was prepared to take further action to maintain the pegged rate.

“The SNB stands ready to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further steps as required,” the SNB said in a statement.
The Zurich-based central bank said the Franc remains highly valued, and the floor for the euro/franc “continues to be the right tool to avoid an undesirable tightening of monetary conditions in the event of renewed upward pressure on the Swiss franc.”

The Swiss Central Bank also confirmed its prediction for growth in the Swiss economy saying that GDP will grow by around 2% in 2014. Despite that it trimmed its forecast for inflation.

The SNB put the exchange rate floor in place in September 2011 after the franc almost reached parity with the euro, amid concerns over the impact of a strong franc on the Swiss economy, particularly regarding exports.

Against the US Dollar the CHF/USD rate tumbled to a two-week low. The France was also weakened by a reduction in tension over Ukraine. The chance of an armed conflict eased after the interim Ukrainian government ordered a withdrawal from the Crimea.