Bloomberg News

SNB May Raise Franc Ceiling to 1.30 Per Euro, JPMorgan Says

October 10, 2011

Oct. 10 (Bloomberg) -- The Swiss National Bank may raise its ceiling for the franc to 1.30 per euro from 1.20 per euro, according to the private-banking unit of JPMorgan Chase & Co.

“We remain of the view that a further upward adjustment in the ceiling is both justified and likely,” Audrey Childe- Freeman, global head of currency strategy at JPMorgan Private Bank in London, said in an e-mailed research note today. “1.25 has recently been mentioned as a new possible reference level, but that would still leave the Swiss franc largely overvalued. Instead, the monetary authorities may set a more ambitious target, at say 1.30.”

The central bank decided on Sept. 6 to cap the franc’s strength at 1.20 per euro to deter investors using it as a shelter from market turmoil. The currency appreciated to a record 1.00749 per euro on Aug. 9 as investors bought it as a haven from Europe’s deepening debt crisis.

The franc appreciated 0.4 percent to 1.2363 per euro as of 11:39 a.m. in London today and was 1.9 percent stronger at 90.96 centimes per dollar.

“The still uncertain international context should theoretically be supportive for the Swiss franc, but we remain of the view that this is not the year to challenge the SNB,” Freeman wrote.

She declined to give a probable timeline for the move when contacted by phone today, saying it was “feasible” before the end of the year.

--Editors: Matthew Brown, Peter Branton

To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net.

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.


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