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SNB’s Jordan talks but the bank has little work to do on the franc

Posted by WorldWideMarkets . on May 23, 2013 3:41:00 AM
currency trading platformSwiss National Bank Chairman Thomas Jordan says the Swiss central bank is committed to the cap it imposed on the franc in 2011 but could adjust the level of 1.20 per euro if necessary, He added the bank is ready to buy foreign currency in unlimited quantities if necessary. His comments and the subsequent gyrations in the Swiss unit justify what some investors had been betting in recent days, particularly as Jordan also said the franc is still highly valued. In Jordan’s aftermath the euro falls to a two-year low against the Swiss franc. UBS said its forecasts for the euro/Swiss franc and the dollar/Swiss franc are 1.27 and 0.99 in three months' time but there are upside risks to their targets. The International Monetary Fund said on Tuesday the SNB should maintain the franc cap given low inflation and growth and the risk of further capital inflows, reiterating it should consider negative rates if the franc jumped. The SNB may adjust the level of the cap. But equally, why would they given the market is doing the work for them?

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