The Swiss franc weakened to its lowest level against the euro in two months. Investors are selling off the franc ahead of the Swiss National Bank policy meeting on Thursday. After a Swiss parliament meeting on Wednesday, the parliament backed a proposal from the centre-left Social Democrats to improve the government’s tools for weakening the franc. Many still think that the Swiss currency is overvalued despite being capped at 1.20 per euro on September 6 last year.
Even if many analysts expect the central bank to keep the franc cap at 1.20 per euro and its interest rate target at near zero, some are saying that the franc cap will be lifted to as high as 1.30. EURCHF has been rising all day, hitting a high of 1.2146 during the North American trading session. This is the highest level since January.
Centre-left politicians and trade unions have repeatedly urged the SNB to weaken the franc further and did so again on Wednesday. Despite the cap, exporters and the tourism industry are struggling.
“This rate of 1.20 is not sustainable and the central bank would be well-advised to act,” leading Social Democrat Susanne Leutenegger-Oberholzer told parliament.