Swiss National Bank (SNB) vice chairman Bruno Gehrig has again expressed his concern about the franc's strength against the euro.This content was published on January 23, 2002 - 11:40
Speaking on Tuesday to a business audience on a panel that included German Bundesbank president Ernst Welteke, a member of the European Central Bank council, Gehrig said that "The current euro level vis a vis the Swiss franc...is somewhat expensive."
He said the relatively strong Swiss franc performance did not fit well with the current economic environment, but the SNB would not target any particular foreign exchange level.
"We don't target anything," he told journalists on the sidelines of Tuesday's conference.
He also said the SNB hoped for a recovery in the second half of 2002, but risks remained substantial.
"I do not know if the next rate move will be up or down. We want to carefully observe how things develop," he said.
Though the euro is still holding above the all time low of SFr1.4391 set against the Swiss currency on September 21, the franc remains relatively strong at about SFr1.47 to the euro.
The SNB has made no secret of its preference for a weaker franc to help spur a sluggish economy. It expects domestic economic growth this year to slow to around 1per cent from a rate estimated at about 1.5 per cent in 2001.
The 12-nation euro zone is Switzerland's major trading partner, and a strong franc makes Swiss exports to the euro zone more expensive. A strong franc also hurts Switzerland's big tourist industry by making holiday paid in euros more expensive.
"We were not very happy about the foreign exchange rate shocks we had seen in September," Gehrig said, but added that the SNB's main tool to address such imbalances remains interest rates, rather than direct intervention in the currency markets.
swissinfo with agencies
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