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SNB says cap on franc is still necessary

The Swiss National Bank's currency cap remains necessary and the central bank won't exclude taking further steps should the crisis in the euro area intensify, its vice president Jean-Pierre Danthine said.

"We find ourselves in a situation in which the franc is still highly valued, and we can't allow a tightening of monetary conditions," Mr Danthine said in an interview yesterday. "It is rather a question whether to be a bit more expansive."

The franc, which investors buy at times of heightened uncertainty, almost touched parity with the euro in August of 2011, threatening to plunge Switzerland into a recession and prompting the SNB to set a cap of 1.20 per euro on the currency.

The euro area remains fragile and the franc could face further appreciation pressure, Mr Danthine said. (Bloomberg)

Irish Independent