The Swiss National Bank toughly pegged the Swiss Franc to the Euro. Agence France-Presse says that the euro costs 1.2 Swiss francs in Switzerland now. In its official press release the Swiss National Bank informs that 1.2 is the lowest rate to carry out exchange transactions at. The central bank notes that such a rate is unlikely to be that stable: if necessary, the franc will be decreased further.
The news about the franc being pegged to the euro was followed by a Swiss stock index hiking by over 4%. In its turn, the Swiss franc dropped on the global market by 9.32% and thus constituted 1,212 francs per one euro. The dollar grew 8% more expensive against the franc and equaled 0.86 franc.
During the last several weeks the Swiss franc was believed to be one of the most reliable currencies in the world. Investors relied on it owing to the financial markets instability driven by uneven recovery after the US and EU economic crisis. Due to these circumstances the Swiss franc repeatedly hit new all-time highs versus the euro and the dollar.
The Swiss authorities have been making every effort to withhold the increasing rate by currency interventions. Still, these measures have had just slight effect on the markets. What steps will Switzerland take to keep the franc below the specified level? There is no clear answer to this question yet. It would be logical enough to suppose that the national central bank will keep making currency interventions (buying dollars and euros in exchange for francs), however, their volume is still unknown.