Forex News
December 4, 2012 @ 11:59 am

EURCHF hits 6-week high

The euro briefly surged to a six-week high against the Swiss franc during the European trade on Tuesday, extending gains from Monday when Swiss banks announced new measures to limit the holdings of Swiss francs by depositors.

Some of the largest banks in Switzerland said they will start imposing negative interest rates on certain deposits in Swiss francs and also charge a fee.

The aim is to curb franc strength which has been hurting the Swiss economy and making its exports more expensive.

Ever since the onset of the euro zone sovereign debt crisis, investors have been flocking to the safety of the Swiss currency resulting in a huge drop in the euro-Swiss exchange rate. This prompted the Swiss National Bank in September 2011 to set a floor of 1.20 CHF on the exchange rate in order to protect the Swiss economy from deflation and a recession.

There were reports that large Swiss banks like Credit Suisse and UBS bank have sent letters to customers encouraging them to keep Swiss franc cash balances as low as possible to avoid negative credit charges.

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