IMF puts pressure on Swiss currency

SWITZERLAND should allow its currency to trade freely once deflationary pressures ease and growth picks up, the IMF has said, though it did not say when the cap should be lifted.

As part of its annual evaluation of the Swiss economy, the results of which were published yesterday, the International Monetary Fund also recommended that the Swiss encourage big banks to improve their capital faster.

The Swiss National Bank imposed a cap of SFr1.20 per euro on the soaring safe-haven franc on 6 September, citing the risk of deflation and recession.

IMF mission chief Enrica Detragiache said introducing the cap on the franc had been appropriate, given the currency’s rapid appreciation, but added the ceiling on the franc should not be permanent.