Swiss Bank Acts to Halt Franc Rise as Investors Seek Refuge in Greek Crisis
Switzerland's central bank was forced Monday to intervene "in order to stabilize the markets," which have tumbled over Greece's escalating crisis, the bank's chief Thomas Jordan said.
Jordan did not specify the amount spent on the intervention aimed at halting the rise in the Swiss franc -- a refuge currency -- but reiterated that the bank had always said it was ready to intervene if necessary.
The current market turmoil over Greece's failure to reach a deal with its creditors "justifies such an action," he said at an international finance forum in Bern.
Jordan's statement was the first time since January 15 that the bank has explicitly said that it had taken action in the forex market to hold down the value of the Swiss franc.
Fears over the wider international fallout stemming from Greece's failure to secure a rescue deal, and the increasing likelihood of it defaulting on Tuesday has sent equity markets plunging. Investors were also selling euros and buying refuge currencies such as the Swiss franc and the Japanese yen.
Jordan confirmed that demand for the Swiss franc had risen sharply, and such an appreciation of the currency would hurt the export-oriented Swiss economy by making the country's products more expensive.
At 0900 GMT, the franc was trading at 1.03 per euro, from about 1.05 euros Thursday.
Source: Agence France Presse
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