The Swiss National Bank (SNB) shocked foreign exchange markets by setting a minimum exchange rate target of 1.20 Swiss francs to the euro yesterday, saying it would enforce it by buying foreign currency in unlimited quantities.
The move immediately knocked about 8 percent off the value of the Swiss franc, which had soared as investors used it as a safe haven from the eurozone’s debt crisis and stock market turmoil.
“The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development,” the central bank said in a statement. “With immediate effect, it will no longer tolerate a euro-Swiss franc exchange rate below the minimum rate of SF1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.”
The bank added that even at a rate of SF1.20 to the euro, the franc was still too high and that it should continue to weaken.
“If the economic outlook and deflationary risks so require, the SNB will take further measures,” the bank said.
Soon after the announcement, the euro was trading at just above the SF1.20 target after earlier being at about SF1.10. The euro also rose against the US dollar and was trading at US$1.417.
“One will think twice about speculating against this target because the SNB is with its back against the wall. They’ve exploited all other options,” said Alessandro Bee, an economist at Bank Sarasin. “Short term its clearly positive because Swiss exporters get supported. Longer term, you could say it bears inflationary risks.”
The Swiss franc nearly touched parity with the common currency on Aug. 9. It fell 8.5 percent against the euro after the announcement to SF1.203 and also dipped almost 8 percent against the US dollar to US$0.8483.
To cushion the economy from a downturn as the strong Swiss franc hurts exports, the central bank cut an already low interest rate target to nil on Aug. 3. It is also boosting the amount of liquidity in the banking system and it had threatened further steps. Those measures had temporarily helped the franc weaken, falling about 18 percent to a seven-week low, but it jumped again last week as worries about the health of the global economy intensified, increasing pressure on the central bank to act again.
‘UNFRIENDLY’: Changing the nationality listing of Taiwanese residents to ‘China’ goes against EU foreign policy as well as democratic and human rights principles, MOFA said Taiwan yesterday called on Denmark to correct its designation of the nationality of Taiwanese residents as “China” or face retaliatory measures. The Danish government in 2024 changed the nationality of Taiwanese citizens on their residence permits from “Taiwan” to “China.” The decision goes against EU foreign policy and contravenes democratic and human rights principles, Ministry of Foreign Affairs (MOFA) spokesman Hsiao Kuang-wei (蕭光偉) said. Denmark should present a solution acceptable to Taiwan as soon as possible and correct the erroneous designation to preserve the longstanding friendship between the two nations, Hsiao said. The issue could damage Denmark’s image and business reputation in Taiwan,
The nation’s fastest supercomputer, Nano 4 (晶創26), is scheduled to be launched in the third quarter, and would be used to train large language models in finance and national defense sectors, the National Center for High-Performance Computing (NCHC) said. The supercomputer, which would operate at about 86.05 petaflops, is being tested at a new cloud computing center in the Southern Taiwan Science Park in Tainan. The exterior of the server cabinet features chip circuitry patterns overlaid with a map of Taiwan, highlighting the nation’s central position in the semiconductor industry. The center also houses Taiwania 2, Taiwania 3, Forerunner 1 and
Taiwan climbed to its highest position in global export rankings in more than three decades last year, buoyed by demand linked to artificial intelligence (AI) that lifted shipments of semiconductors and technology products, Ministry of Finance data released yesterday showed. Taiwan accounted for 2.4 percent of global exports last year, or about US$640 billion, ranking 12th worldwide, the data showed. That was up four places from a year earlier and marked the nation’s best ranking since 1994, the ministry said. Taiwan’s share of global exports rose by 0.5 percentage points from the previous year, the largest increase among major economies, reflecting the nation’s
FIRST TRIAL: Ko’s lawyers sought reduced bail and other concessions, as did other defendants, but the bail judge denied their requests, citing the severity of the sentences Former Taipei mayor Ko Wen-je (柯文哲) was yesterday sentenced to 17 years in prison and had his civil rights suspended for six years over corruption, embezzlement and other charges. Taipei prosecutors in December last year asked the Taipei District Court for a combined 28-year, six-month sentence for the four cases against Ko, who founded the Taiwan People’s Party (TPP). The cases were linked to the Core Pacific City (京華城購物中心) redevelopment project and the mismanagement of political donations. Other defendants convicted on separate charges included Chinese Nationalist Party (KMT) Taipei City Councilor Angela Ying (應曉薇), who was handed a 15-year, six-month sentence; Core Pacific
RSS