Switzerland’s National Bank has confirmed that it has intervened in the sudden rise of the franc in the wake of Brexit.
With Brexit voters choosing to leave the European Union, Switzerland’s central bank has given a rare confirmation that it had intervened in the forex market in order to weaken the Swiss franc.
In the wake of the ‘Leave’ vote, the Swiss franc, which was considered as a safe haven, rose to its zenith against the euro since August 2015. Brexit saw it surge to its highest ever one-day jump since the Swiss National Bank (SNB) removed its franc peg to the euro on January 15, 2015.
As a result of SNB’s interventions, the euro rose steadily from its low of 1.0623 to around 1.0790 francs in early London trade.
“Following the United Kingdom’s vote to leave the European Union, the Swiss franc came under upward pressure. The Swiss National Bank has intervened in the foreign exchange market to stabilize the situation and will remain active in that market,” read a statement from SNB.
The SNB typically is mum on its market interventions although it has on such rare occasions, in the past, it confirmed its hand in guiding the franc in the forex market. It did so recently during the Greece financial crisis.
Last week, officials from the SNB had said they would actively counter any untoward surge in the franc as it is already overvalued, with the implication that this would open the gates for deepening interest rates into negative territories.
As a fallout of Brexit, global financial markets have plunged, sparking fears that the outcome of the 52%-48% referendum will hit investments in the world’s fifth largest economy and create uncertainty with the EU, the world’s biggest trading bloc.
The vote could also potentially threaten Britain’s role as the world’s financial capital.
Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy
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