Swiss Currency Move Shocks Global Markets

Seema Shah
Principal Global Fixed Income

On 15 January, the Switzerland’s central bank, the Swiss National Bank (SNB), surprised – no, shocked – economists and markets alike when it announced that it had abandoned the floor for their currency, the Swiss franc (CHF). Introduced in 2011, the minimum exchange rate target of CHF1.20 against the euro has prevented the Swiss franc from appreciating to a level that the SNB considers “overvalued,” allowing the Swiss economy to recover from the financial crisis. So why abandon it now?

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