The Swiss franc weakened against the euro today on the increasing likelihood of the Swiss National Bank lifting the franc-euro cap and introducing negative interest rates by next week’s policy meeting.
The SNB had set a floor of 1.20 francs to the euro on September 6 in an effort to curb the strong franc which was affecting Swiss exports.
Today Finance Minister Eveline Widmer-Schlumpf said negative interest rates and capital controls “are issues which are being examined” by a committee looking at ways to counter the currency’s strength.
On Tuesday, data showed Swiss consumer prices had fallen more than expected in November. Also data showed third-quarter growth that was the slowest in more than two years and this has fuelled speculation the SNB will act to curb the franc next week.
In reaction to these comments, the Swiss franc fell against the euro as well as against most of its other major counterparts. EURCHF reached as high as 1.2440 in the session.