An exchange traded fund tracking the Swiss franc’s fluctuations against the dollar was down about 1% on Wednesday after the Swiss National Bank unveiled new measures to halt the currency’s surge.
“The substantial rise in risk aversion on the international financial markets has further intensified the overvaluation of the Swiss franc in the last few days,” the SNB said in a statement Wednesday.
The central bank said it will again boost the supply of liquidity to the money market, and will conduct foreign exchange swap transactions.
“The massive overvaluation of the Swiss franc poses a threat to the development of the economy in Switzerland and has further increased the downside risks to price stability,” it said. “The SNB is keeping a close watch on developments on the foreign exchange market and on financial markets. If necessary, it will take further measures against the strength of the Swiss franc.”
CurrencyShares Swiss Franc Trust (NYSEArca: FXF) rallied to a new all-time high on Tuesday after the Federal Reserve signaled it would keep its key interest rate near zero at least until mid-2013. [Swiss Franc ETF Jumps]
Investors are drawn to the Swiss franc in times of financial turmoil as a safe haven, and because of the central bank’s conservative reputation on monetary policy.
Japan has also intervened in currency markets in an effort to force the yen lower against the dollar. However, yen ETFs have continued to gain ground despite the moves. [Japanese Yen ETF Shakes Off Intervention]
CurrencyShares Swiss Franc Trust
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.