Franc advances after bond auction

Posted On: April 11, 2012
The Swiss sale of government bonds on Wednesday benefited the price of the nation's monetary unit against the U.S. dollar on Wednesday, according to Bloomberg.

But after the government auctioned notes set for maturity in 2021 and 2042, the franc was minimally changed against the common currency of the European Union. Thus far this year, the Swiss franc has climbed 1 percent in value, trailing only the New Zealand dollar and the Norwegian krone.

The nation established a 1.20 per euro cap in early September of last year as a method of protecting exports as investors attempted to avoid damages caused by the sovereign debt crisis.

Reuters reports that cap was challenged on two separate occasions within the past week. On Thursday the franc surpassed it and this past weekend saw the franc approached it.

"We won't accept any exchange rate below 1.20. We are committed to buying foreign exchange in unlimited quantities to defend this level," a spokesman for the SNB told Reuters.

The cap also is an instrument that Switzerland employed to stave off deflation, Reuters reports.

Category: Industry News

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