Business

Swiss government pledge to act to weaken the franc

  • 8 August 2011
  • From the section Business

The Swiss government has pledged action to reduce the value of the franc, saying that "energetic intervention" was required.

The comments came after an emergency meeting, but no details were released about what measures may be planned.

Currency investors have been piling into the Swiss franc, which - like gold - is popular in times of trouble because of its relative safety.

This has increased the value of the franc, hurting Swiss exporters.

The US dollar hit a record low of 0.7485 against the franc on Monday, before the greenback recovered slightly to 0.7525.

The Swiss franc remains about 30% stronger against the dollar than a year ago.

Meanwhile, Switzerland's main SMI stock index ended Monday trading down 4%.

The franc also strengthened 0.3% to 1.0917 per euro, despite the European Central Bank said be intervening in the financial markets to help bring stability.

According to the Bloomberg news agency, the franc is higher this year against 16 major currencies.

"The Swiss franc is the gauge of how nervous the market is," said Jane Foley, a foreign exchange strategist at Rabobank International.

In January, Switzerland's Federation of Small and Medium Businesses described the franc's appreciation as a "crisis".

The Swiss central bank has in the past intervened in the currency markets to halt the franc's rise against the euro, but with only limited success.

Last week, the country cut its interest rates in a bid to make its currency less attractive.

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