BERNE: The Swiss National Bank said it remains sufficiently concerned about the strength of the franc and the risks to its economy to stick to its cap on the safe-haven currency.
The Swiss economy has been expanding faster than expected, but exports fell last month and the bank remains keen not to fan any upward pressure on the franc as volatility sweeps global markets.
"An appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss economy," SNB Chairman Thomas Jordan told a news conference after the bank's quarterly monetary policy meeting.
"The SNB stands ready to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities and to take further measures as required."
Jordan said the SNB had not intended to signal a change in tone by omitting from its statement a pledge to defend the franc cap "with utmost determination" as in previous statements.
Bantleon economist Daniel Hartmann said the SNB had struck a very dovish tone with its sombre economic outlook.
"The SNB is doing everything possible to not provoke any expectations of rate rises, thus preventing upward pressure on the Swiss franc," Hartmann wrote in a note.
The franc, which fell against the euro last month as fears over a worsening of the euro zone crisis faded, briefly ticked up against the euro to around 1.2311 francs after the news from around 1.2330 francs beforehand.
Jordan said safe-haven demand continued to keep the franc strong as financial market volatility had risen again in recent weeks, although he expected the currency to fall further over the next few quarters.
Global share markets sagged on Thursday after Federal Reserve Chairman Ben Bernanke said the US economy is expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.
Jordan said it was hard to say how global central banks would react to the Fed shift and said he could not forecast when the rate cycle would turn in Europe. He added that the question of a Swiss exit was so far away that the SNB had not yet thought about how to communicate it.
The SNB put a lid on the safe-haven currency in September 2011, citing the risk of deflation and recession as the strong currency squeezed exporters and the tourism industry.
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