American focus:
06.09.2011, 18:10

American focus:

 

The franc tumbled, dropping the most ever against the euro, after the Swiss central bank imposed a ceiling on the currency’s exchange rate and said it will defend the target with the “utmost determination.”
The franc depreciated at least 7.8 percent against all the most-active currencies, with the biggest decline versus the Norwegian krone. The yen retreated against the dollar as Japan’s Finance Minister Jun Azumi said he will call for Group of Seven officials that “excessive yen rises” are bad for the global economy. The euro fell below its 200-day moving average against the dollar.
“The Swiss National Bank indicated to the market that they are more than willing to print as much money as necessary to defend this peg and defend it with resolve,” said Jessica Hoversen, a New York-based analyst at the futures broker MF Global Holdings Ltd. “The market is starting to play the Norwegian krone as a safe haven.”
The franc had surged to records against the euro and the dollar, hurting exports and eroding economic growth. While the Swiss National Bank last month boosted liquidity to the money market and lowered borrowing costs to zero, investor concern that governments may struggle to contain Europe’s worsening debt crisis has continued to push the currency higher.
The SNB is “aiming for a substantial and sustained weakening of the franc,” the Zurich-based central bank said in an e-mailed statement today. “With immediate effect, it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs” and “is prepared to buy foreign currency in unlimited quantities.”
The franc is the best performer this year among a basket of the currencies of 10 developed markets, appreciating 5.1 percent. The dollar was the worst performing currency, losing 4.9 percent.
Swiss National Bank President Philipp Hildebrand cut interest rates to “as close to zero as possible” on Aug. 3, and subsequently boosted banks’ sight deposits, or cash that can be withdrawn on demand, to 200 billion francs ($255 billion) from 30 billion francs.
World Bank President Robert Zoellick said risks to the global economy are intensifying, with the euro region’s outlook dependent on European leaders making the right decisions.

 

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