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(Bloomberg) -- The Swiss National Bank is still willing to intervene in currency markets even after giving up its cap on the franc, Vice President Jean-Pierre Danthine said.
“We’re fundamentally prepared,” Danthine told the Tages- Anzeiger newspaper on Tuesday. “The minimum exchange rate couldn’t have been maintained anymore” with European Central Bank bond-buying, he said.
The franc has traded near parity against the euro since the SNB sent shock waves through markets on Jan. 15 by abandoning its franc cap of 1.20 per euro and increasing a charge on deposits. Fund flows had put upward pressure on the franc as the euro weakened amid speculation the ECB would ease its monetary policy to fight the threat of deflation.
ECB President Mario Draghi said on Jan. 22 that the Frankfurt-based central bank would buy 60 billion euros ($68 billion) a month in debt starting in March.
The Tribune de Geneve and 24 Heures newspapers published similar interviews with Danthine.
At minus 0.75 percent, the SNB’s deposit rate compares with the ECB’s minus 0.2 percent. Asked how much further the SNB could cut its rate, Danthine said “it’s very hard to say.”
--With assistance from Andy Hoffman in Geneva.
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