EUR/CHF Drops Below 1 as SNB Opens Floodgates

It was the most dramatic day of trading for Switzerland’s franc since its neighbors introduced the euro 16 years ago.

The franc surged the most on record and reached its strongest-ever level against the 19-nation shared currency as cash flooded over the border after the Swiss National Bank removed a cap on the currency that had held back inflows for more than three years.

The SNB had imposed its limit on the exchange rate as an exodus from euro assets during the region’s debt crisis in 2011 strengthened the franc and raised the prospect of deflation. While defending the cap pushed up Switzerland’s foreign-exchange reserves, the limit was pierced only once, in April 2012. As well as removing the measure today, the SNB also said it will push the interest rate on sight deposits to minus 0.75 percent from minus 0.25 percent.


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