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'Unique situation' led to Swiss franc move: US

AFP · 8 Sep 2011, 09:33

Published: 08 Sep 2011 09:33 GMT+02:00

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Switzerland has been "disproportionately" affected by volatility on the foreign-exchange market due to the eurozone's financial crisis, a US official said Wednesday.

Asked at a Washington news briefing about Switzerland's surprise action on Tuesday setting a cap on the Swiss franc's rise against the euro, a Treasury official, speaking on condition of anonymity, said she could understand it.  

"Switzerland has quite unique sets of challenges. It's situated in the middle of Europe and has been, I think, quite disproportionately affected by the financial stresses in Europe," the official said.  

"It's a quite unique circumstance where you see quite disorderly movements associated with its unique position," she added.  

The Swiss National Bank surprised markets on Tuesday by placing a floor on the euro's value against the Swiss franc, targeting it at 1.20 versus the European currency, to deal with vast rises in the value of the traditional safe-haven franc amid financial turmoil.  

The central bank vowed to do everything possible, including buying "unlimited quantities" of foreign currency, to prevent the franc from rising.  

For Washington, this decision does not change the view of the Group of Seven advanced economies on foreign exchange.  

"The G7 in the past said it will be vigilant on excessive volatility and disorderly movements in foreign exchange rates, so my anticipation is that the position with regard to support for market-based exchange rates will continue to be a central thrust of our discussions," the official said.  

Story continues below…

The G7 finance chiefs are set to meet on Friday in Marseille, France. The United States will be represented by Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke.  

The G7 also includes Britain, Canada, France, Germany, Italy and Japan.

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