Danthine Says SNB Hasn’t Intervened to Defend Ceiling in Months
Oct. 9 (Bloomberg) — The Swiss National Bank hasn’t intervened in currency markets to protect its franc ceiling in months, SNB Vice President Jean-Pierre Danthine said, adding that the central bank stands ready to enforce it if needed.
“We haven’t intervened for several months,” Danthine said today in Martigny, Switzerland. Even so, the cap “remains the central tool to ensure that monetary conditions are appropriate,” and the SNB will defend it “with the utmost determination,” he said.
The franc strengthened to 1.2045 per euro in early September after European Central Bank President Mario Draghi stepped up his rhetoric on policies needed to combat weak inflation. It fell against the euro and the dollar last week amid speculation that SNB may step in to protect the cap, which it hasn’t been forced to do since September 2012.
The Swiss currency was little changed today and traded at 1.2115 at 12:39 p.m. in Zurich. Against the dollar it stood at 94.96 centimes.
Some purchasing-power-parity models “suggest fair value is around 1.28 to 1.30” per euro, Danthine said.
Several economists have speculated the SNB could mimic the ECB and enact a charge on banks’ excess reserves to stem a rise in the franc. The ECB cut its deposit rate to minus 0.1 percent in June and to minus 0.2 percent in September.
Negative rates like those in the euro area are a possibility and could become necessary if the situation in the 18-nation currency region deteriorates, Danthine said today, echoing comments by SNB President Thomas Jordan in the past month.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net To contact the editors responsible for this story: Fergal O’Brien at fobrien@bloomberg.net Zoe Schneeweiss, Jana Randow
