SNB maintains cap on euro

The Swiss National Bank (SNB), led by interim chairman Thomas Jordan, has maintained the franc ceiling at SFr1.20 per euro.

The Zurich-based central bank said in its quarterly report on Thursday that it was also keeping its benchmark interest rate at zero.

The Swiss franc strengthened after the SNB announcement, recouping losses from Wednesday when it hit a one-month low against the euro and dollar.

Although economists had widely expected the SNB to keep the floor of the euro exchange rate unchanged there had been speculation it could be raised to SFr1.25. Some economic and political circles in Switzerland have called for it to be changed.

In addition, the target range for the three-month Libor rate will remain the same at 0-0.25 per cent. The SNB will also continue to maintain liquidity on the money market at an exceptionally high level.

“While the high value of the Swiss franc continues to present enormous challenges to the economy, the minimum exchange rate is having an impact. It has reduced exchange rate volatility and given business leaders a better basis for planning. There are growing indications that Switzerland’s economy is stabilising. For 2012, the SNB is now forecasting moderate growth, at close to one per cent,” the bank said in a statement.