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Swiss central bank intervenes to stabilise Swiss franc after Brexit vote

AFP , Friday 24 Jun 2016
Swiss central bank (Reuters)
Swiss central bank (Reuters)
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Switzerland's central bank said Friday it had "intervened" in the foreign exchange market to stabilise the Swiss franc, considered a safe haven currency, following the so-called Brexit vote.

"Following the United Kingdom's vote to leave the European Union, the Swiss franc came under upward pressure," the bank said in a statement, adding that it had "intervened in the foreign exchange market to stabilise the situation and will remain active in that market."

As the result of the vote became clear, the Swiss franc strengthened considerably against the European single currency, trading at just 1.06 francs to the euro at 7:00 am (0500 GMT), compared to 1.10 francs to the euro seven hours earlier.

By 0750 GMT, the franc had meanwhile weakened some, trading at 1.085 to the euro.

The Swiss franc, long considered a safe haven currency, already saw its value surging after the publication of various polls in the run up to Thursday's vote suggesting Brexit could win the day in the June 23 referendum.

A stronger franc hits Swiss exporters, which are forced to squeeze costs and cut prices to remain competitive on an international market.

The Swiss central bank introduced a negative deposit rate early last year after it abruptly abandoned its three-year effort to hold down the franc's exchange rate to protect exports.

Last week, the central bank voiced hope that British voters would opt to remain in the EU, and maintained it monetary policy in place.

Bank chief Thomas Jordan at the time warned that the referendum "may cause uncertainty and turbulence to increase," vowing that "we will take measures if required."

The bank stuck with the -0.75 percent deposit rate, which is meant to dissuade foreign investors buying and holding Swiss francs as a safe haven investment.

The target range for the three-month Libor also remained unchanged at between -1.25 and -0.25 percent.

The Swiss rejected membership in the EU in a 1992 referendum.

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