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Tuesday, March 28, 2023

Swiss Central Bank intervenes in Currency markets amid pressure on Franc

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Switzerland’s central bank has said it has intervened in currency markets after the Swiss franc came “under upward pressure” after the UK voted to leave the European Union.

The Swiss National Bank (SNB) said in a statement that it intervened in the foreign exchange market to “stabilise the situation” and will “remain active in that market”.

The UK’s referendum vote to leave the EU has caused turmoil in financial markets, driving many stock markets lower and leaving currency exchanges reeling.

Joe Rundle, head of trading at ETX Capital, said in a note that the SNB move was aimed to “keep a lid on the franc after a flight to safety following the Brexit vote”.

He said many central banks “could be forced into taking drastic action to stem outflows”.

Meanwhile, the European Central Bank (ECB) said it is “closely monitoring financial markets” in the wake of the Brexit vote.

The chief monetary authority for the 19 countries that use the euro said that it “stands ready” to provide additional credit to financial institutions if they need it to do business.

It also said it was staying in close contact with other central banks.

Otherwise the ECB did not immediately announce any new measures. The bank already provides short-term cheap credit to banks in any amount at regular intervals, and has pumped more cash into the system through a bond purchase programme aimed at raising inflation.

The EU referendum vote has led to sharp falls in stocks and the British pound

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