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The Swiss National Bank hasn't given up entirely in its attempt to avoid an overvalued currency. It said it would continue to intervene in foreign exchange markets.
Kit Juckes, strategist at Societe Generale, said it appeared the central bank acted because it saw no end in sight to upward pressure on the franc from ECB stimulus, fears about Greece reviving the eurozone crisis and other geopolitical tensions.
"That's not a great vote of confidence in the prospects for either calmer markets in the months ahead, or for the euro's future value. So the [bank] has decided to jump to 'Plan B' rather than persist with the previous one," he wrote in a note.
Related: Why Europe will outrun Wall Street in 2015. No, really.
It may, though, pay more attention to the franc's value against a broader basket of currencies, rather than focusing on the euro.
While roughly 45% of Swiss exports go to eurozone countries, and a sharp jump in the currency against the euro will hurt, policymakers may be more concerned about protecting the market for Swiss luxury goods in China, Juckes said.
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The Swiss National Bank hasn't given up entirely in its attempt to avoid an overvalued currency. It said it would continue to intervene in foreign exchange markets.
Kit Juckes, strategist at Societe Generale, said it appeared the central bank acted because it saw no end in sight to upward pressure on the franc from ECB stimulus, fears about Greece reviving the eurozone crisis and other geopolitical tensions.
"That's not a great vote of confidence in the prospects for either calmer markets in the months ahead, or for the euro's future value. So the [bank] has decided to jump to 'Plan B' rather than persist with the previous one," he wrote in a note.
Related: Why Europe will outrun Wall Street in 2015. No, really.
It may, though, pay more attention to the franc's value against a broader basket of currencies, rather than focusing on the euro.
While roughly 45% of Swiss exports go to eurozone countries, and a sharp jump in the currency against the euro will hurt, policymakers may be more concerned about protecting the market for Swiss luxury goods in China, Juckes said.
[You must be registered and logged in to see this link.]