The Swiss franc fell from a 10-month peak hit against the euro on Monday after Swiss National Bank head Philipp Hildebrand said the bank would take action to hinder an excessive appreciation of the Swiss currency. "The SNB will continue to prevent any excessive appreciation of the Swiss franc against the euro," Hildebrand, who became chairman of the central bank on January 1, said in a statement released to reporters.
"The SNB has no exchange rate target but it will monitor foreign exchange market developments very closely," he said. The franc briefly fell nearly 50 ticks against the euro after Hildebrand's comments, hitting a day's low around 1.4795 shortly after 0730 GMT and moving further away from 10-month peak around 1.4725 hit earlier in the day. The franc had gained 0.1 percent against the euro compared to the New York close, trading at 1.4777 per euro at 0753 GMT. The franc was 0.3 percent higher against the dollar at 1.0188 per dollar.
At its December monetary policy review, the SNB softened its intervention stance, saying it would combat only an "excessive" appreciation of the currency, and market participants have been trying to establish where precisely the SNB's new pain threshold lies. On December 18, the franc, which is regarded as a safe haven currency, breached what analysts regarded then as the Swiss National Bank's intervention threshold of 1.50 per euro for the first time in nine months. Since then, the franc has dipped below 1.48 per euro.
"Clearly, the central bank has shifted policy after it changed its language last month to say it would only intervene to counter 'excessive' gains in the Swiss franc now. As a result euro-Swiss has fallen over the last few weeks from 1.51 to around 1.4750. Medium-term we think the trend remains downward for the cross," UBS foreign exchange strategy director Mansoor Mohi-uddin said in a note.
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