President of the Swiss National Bank (SNB), Philipp Hildebrand, has raised the spectre of further intervention to devalue the Swiss franc.This content was published on November 6, 2011 - 11:53
The SNB moved in September to set a minimum exchange rate of SFr1.20 to the euro, as jittery global investors flocked to the currency as a safe haven in increasingly unstable global financial markets.
Speaking to the newspaper NZZ am Sonntag, Hildebrand said the franc was still overvalued, but did not speculate on whether the bank would go so far as setting a new minimum exchange rate of SFR1.30 to the euro.
Unions have called for the rate be set at SFr1.35 to the euro in a bid to shore up Switzerland’s export-orientated industries. Several Swiss firms in recent months have blamed the strong franc for moves to slash local jobs.
“The franc is still at a very high value against the euro. We expect it will weaken more with time but if that is not the case, it could lead to deflationary trends and put enormous pressure on the economy,” Hildebrand told the newspaper.
“If the economic conditions and this deflationary evolution demand it, we are ready to take other measures.”
Meanwhile, speaking to Le Matin Dimanche newspaper, Finance Minister Johann Schneider-Ammann said the government had no plans for a second package of measures to assist businesses struggling with the effects of the strong franc.
In September, the Swiss parliament approved a government plan to inject SFr870 million ($975 million) into the economy in a bid to counter the effects of the strong franc.
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