Tuesday

12th Nov 2019

Euro falls after Switzerland abandons currency cap

  • The euro plunged in value against the Swiss franc after the Swiss national bank scrapped its minimum exchange rate. (Photo: pixelfrenzy)

The euro lost nearly 20 percent of its value against the Swiss franc on Thursday after the central bank abandoned the cap on the franc's value against the single currency.

In a statement on Thursday (15 January) the Swiss National Bank (SNB) said that the minimum exchange rate of CHF 1.20 per euro, introduced in September 2011, was no longer justified and that “divergences between the monetary policies of the major currency areas have increased significantly”.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The value of the Swiss franc increased by around 30 percent in the hours following the announcement, falling from 1.2 to 0.8 before reaching 1.04 at the close of trading.

The euro also fell to new lows against the dollar and sterling.

“The euro has depreciated substantially against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar,” said Thomas Jordan, the chairman of the Swiss National Bank.

“In these circumstances, the SNB has concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified,” he added.

At the same time the SNB also reduced a key interest rate from -0.25% to -0.75%, increasing the amount investors have to pay to hold deposits in Swiss banks.

The move is also a reflection of the eurozone’s weakness and a further indication that markets expect the European Central Bank to launch its own money-printing programme - known as quantitative easing - when its governing council meets next Thursday.

However, a stronger franc will hurt Swiss exports, leading the country’s stock market to fall by 9 percent – its biggest fall since 1989.

It is also bad news for the country's tourist industry at a peak time for the Alpine skiing season.

Nick Hayek, chief executive of watchmaker Swatch, described the decision as a “tsunami" for Switzerland's economy.

EU and China agree to defend 'gastronomic jewels'

Manchego cheese, Panjin rice and Polish vodka will all be protected under a new EU-China agreeement. But the two trading giants continue to struggle over other trade-related deals.

News in Brief

  1. Three new commissioner-designates pass legal scrutiny
  2. ECJ: EU countries must label Israeli settlement products
  3. Belgian asylum centre set on fire
  4. Xi Jingping in Athens promises new investment
  5. Farage's Brexit Party will not stand in Tory-held seats
  6. British founder of Syrian 'White Helmets' found dead
  7. Eight member states ask for EU aviation tax
  8. EU allocates €55m humanitarian aid to Sudan

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. New commissioners clear 'conflict of interests' hurdle
  2. Israeli labelling ruling lets consumers make choice
  3. What does Macron really want on Western Balkans?
  4. Far-right Vox celebrates, as Spain left without majority
  5. EU 'climate bank' won't rule out carbon capture
  6. New hearings for the von der Leyen commission This WEEK
  7. Bosnia wants explanation for Macron's 'time-bomb' remark
  8. MEPs slam Commission over common charger delay

Join EUobserver

Support quality EU news

Join us