EUR/CHF hit a record low today of 1.2201.  IMF came out with the following comments today:

  • Swiss GDP to rise to 2.4% in 2011, 1.8% in 2012
  • SNB, Swiss National Bank, should start raising interest rates
  • Current SNB rate is unsustainable
  • Swiss economy showing strong expansion
  • SNB should only intervene on excessive volatility
  • Stronger franc unlikely to curb inflation significantly

IMF suggestion of SNB should only intervene on excessive volatility should make you chuckle a bit.  Considering SNB have lost billions of dollars on failed intervention attempts in order to prop up EUR/CHF, IMF surely did not win any friendship points with that statement.

The Swiss National Bank has attempted for years to cap its own currency gains, by buying euros and selling its own currency against it, EUR/CHF.  Ideally in the past, they would intervene on any move lower than 1.50 in order to prop it back up.  This policy clearly has failed.  This has not only cost them billions of dollars in attempting to intervene but also hurt exporters as well.

EUR/CHF - monthly chart


Source: FXCM