Negative interest rates and penalties for holding Swiss francs in cash will continue, the Swiss National Bank (SNB) said yesterday.
Switzerland’s central bank is keeping the interest rate on sight deposits at minus 0.75 per cent, and leaving the target range for the three-month Libor unchanged at between minus 1.25 per cent and minus 0.25 per cent.
The SNB said: “Negative interest rates in Switzerland make holding investments in Swiss francs less attractive and will help to weaken the Swiss franc over time. Overall, the Swiss franc is significantly overvalued.”
The bank first introduced negative rates in December, as part of an attempt to stop the franc hitting its currency exchange ceiling of 1.2 Swiss francs to the euro.
Uncertainties in the market often cause a flight to the franc, viewed by many as a safe haven, and an overly strong franc can be damaging to exports.
The SNB yesterday cited the “difficult financial situation in Greece and geopolitical tensions” as just two of the risks to global economic recovery that could impact on the franc.