The Swiss franc edged closer to an all-time high against the euro on Monday and traders were watching closely to see just how much the Swiss National Bank will allow the Swissie to climb. The SNB has been intervening in the forex markets over the past year as part of its efforts to protect the Swiss economy and until recently the 1.46 francs-per-euro level was seen as the central bank's intervention threshold.
But the SNB has recently let the franc rise above that level and the franc is now hovering at little over 1.43 per euro, close to 17-month highs, after SNB board member Jean-Pierre Danthine said Swiss firms and consumers should prepare for exchange rates set freely by the market.
"The SNB's inaction on EUR-CHF is quite puzzling, but this sort of benign neglect will not continue for ever," analysts at Unicredit said, adding the bank should react quickly and prevent the franc from breaching the October 2008 low of 1.43 per euro. The franc was slightly stronger against the euro compared with Friday's New York close of 1.4359, trading at 1.4342 per euro.
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