SNB's Jordan Says Franc Still Strong Despite Its Recent Decline

(Bloomberg) -- The franc remains highly valued, requiring the Swiss National Bank to continue with its expansive monetary policy, Thomas Jordan said.

While there has been “a certain decline in the franc's overvaluation, the franc remains highly valued,” the SNB president said on Thursday at an event in Martigny, Switzerland. “There's no reason to change our monetary policy. The situation on foreign-exchange markets remains fragile.”

Since early 2015, Switzerland's central bank has been using a combination of negative interest rates and a pledge to use currency interventions to take pressure off the franc, beloved among investors as a haven at times of market stress. Although policy makers kept the deposit rate unchanged at minus 0.75 percent at their quarterly policy review last month, the SNB modified its standard label for describing the strength of the franc -- saying the “significant overvaluation” has been reduced.

The franc has fallen almost 7 percent against the euro this year. It was trading at 1.14945 per euro at 12:26 p.m. in Zurich, down 0.2 percent on the day.

“The SNB isn't thinking about changing its monetary policy,” Jordan said. “It wouldn't be a good idea now to tighten monetary conditions.”

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Paul Gordon at pgordon6@bloomberg.net, Zoe Schneeweiss, Kevin Costelloe