The Swiss franc has appreciated almost 30% against the single currency on Thursday after the central bank surprisingly removed the fixed maximum rate that the last three years held the rate at a level of 1.20 francs per euro. Communication from the central bank triggered a chaotic market reaction, as in the first minutes after it reached a rate 0.8052 francs per euro, before falling back to levels around 1.03 francs. The Swiss currency also rose by about 25% against the US dollar, during the course of trade reached 0.89 francs to the dollar.
Only a few days ago the leadership of the central bank continued to maintain that peg is the cornerstone of monetary policy. In recent months, the bank has been under strong pressure in terms of cash in September 2011, the maximum rate that had to limit currency appreciation caused by increased because of the debt crisis in the euro area demand for safe assets.
Since the beginning of this year increased prospects the European Central Bank (ECB) to start printing money again created tension in the currency markets, forcing the Swiss central bank to buy more active euros to maintain the course. Along with the release of course the bank introduced a new reduction of the basic interest rate, which aims to reduce interest francs. Interest has already been -0.5%, it becomes -0.75%, the bank said it would remain active in the currency markets to influence monetary conditions.
Due to the unique status of Switzerland as a banking haven as well as a self-designated "neutral" country during war times, Swiss Banks are the magnet for storage of investments from wealthy individuals (and sometimes crimimals) all over the world. These people park their investments as gold (stored in gold vaults), in foreign currencies (in Swiss Banks) or simply leave it to investment firms to manage their finances in whatever manner is deemed fit.