Swiss Central Bank Tries Again to Weaken Franc

LONDON &mdash; The Swiss National Bank announced new monetary measures Wednesday to weaken the surging franc, which it regards as massively overvalued. The announcement checked the recent surge in the currency against the dollar and the euro. But analysts said it would be hard for the Swiss authorities to restrain the currency unless global markets stabilized. Investors have been eager to hold the franc, pushing it to new highs, even though they receive negative real <a href="http://www.trading666.com/rayban-sunglasses-rayban-AAA-sunglasses-f2-49-c3-66.html"><strong>cheap rayban sunglasses for sale </strong></a> interest rates for doing so. That reflects their confidence in Switzerland as a stable economy and a lack of faith in other currencies. The euro zone is in the midst of a sovereign debt crisis and Standard & Poor&rsquo;s last week stripped the United States of its AAA credit rating for the first time. &ldquo;The massive overvaluation of the Swiss franc poses a threat to the development of the economy in Switzerland and has further increased the downside risks to price stability,&rdquo; the Swiss National Bank said in a statement. &ldquo;The S.N.B. is keeping a close watch on developments on the foreign exchange market and on financial markets. If necessary, it will take further measures against the strength of the Swiss <a href="http://www.trading666.com/lv-handbags-lv-A-quality-handbags-f2-3-c3-9.html"><strong>wholesale lv handbags online from china </strong></a> franc.&rdquo; The bank said that it would significantly increase the supply of liquidity to the Swiss franc money market. It said that it would rapidly expand banks&rsquo; sight deposits, an S.N.B. liquidity facility through which banks can withdraw funds, to 120 billion francs from 80 billion francs. The bank also announced that it would conduct foreign exchange swap transactions to create liquidity in Swiss francs. The measure was last used in 2008. &ldquo;If you make a big assumption that global markets are stabilizing and that the Fed may come to the rescue&rdquo; with another round of qualitative easing, &ldquo;then the Swiss may get away with it,&rdquo; said Simon Derrick, chief <a href="http://ec.tcren.cn/view.php?id=10"><strong>KRW/CZK</strong></a> currency strategist in London at Bank of New York Mellon. &ldquo;But it&rsquo;s a big assumption to make at this point.&rdquo; The euro rose after the decision, to 1.0402 francs. It had reached a record 1.0075 Tuesday. Against the dollar, the currency was at 72.34 centimes, down from an all-time high of 70.71 centimes Tuesday. Mr. Derrick said the franc was being undermined Wednesday by fears among traders that the S.N.B. might also directly intervene in markets to sell francs. The Bank of Japan sold yen last week to try to choke off inflows to Japan. Last week, the S.N.B. announced that it would aim to keep interest rates &ldquo;as close as possible&rdquo; to zero and that said it would very significantly increase the supply of francs in the money market. But the impact of those measures was short-lived after global stock markets tumbled and investors rushed in safer assets.