• Switzerland's news in English

Franc peg irks Norway and Canada

The Local/AFP · 9 Sep 2011, 10:59

Published: 09 Sep 2011 12:16 GMT+02:00
Updated: 09 Sep 2011 10:59 GMT+02:00

Facebook Twitter Google+ reddit

Switzerland's moves this week to stem the rise of the franc were criticized on Thursday by Norwegian and Canadian officials concerned about the impact of the franc-euro peg on global currency markets.

Investors poured into other currencies belonging to economies considered financially solid, with Norway among the top destinations, the Wall Street Journal (WSJ) reported.

Norwegians were greeted on Wednesday by the strongest krone in eight years.

The decision by the SNB to set a minimum price for the franc at €1.20 on Tuesday was seen as an act of desperation by investors who began to buy Norwegian kroner that afternoon.

The franc fell instantly by 7.7 percent to arrive at that minimum, while the euro slumped further against the Norwegian currency.

Norway’s central bank governor Oystein Olsen is considering cutting interest rates to slow down the flow of money into the Norwegian krone.

“A swift policy response – likely lower interest rates – is in the offing if the krone keeps rising,“ Olsen told the Wall Street Journal, warning investors that a burgeoning krone would hamper the Norwegian economy.

Norges Bank, Norway’s central bank, stated that liquidity in the krone was too low for it to be considered a haven, while dismissing speculation that it would follow Zurich’s lead and intervene to weaken its currency.

“We have a policy based on not intervening. That remains,“ Olsen told the Financial Times on Wednesday.

Canadian Finance Minister Jim Flaherty on Thursday told the WSJ he is “concerned“ about Switzerland’s move into foreign exchange markets, which he believes could spark currency wars where countries compete for low exchange rates for their own currency.

Flaherty said he would raise the matter at Friday's Group of Seven (G7) meeting of finance ministers in Marseille, France.

The Swiss National Bank surprised markets on Tuesday by placing a floor on the euro's value against the Swiss franc 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.

The Swiss franc had risen strongly in response to the eurozone debt crisis, hitting Swiss exporters and the tourism industry hard.

The Local/AFP (news@thelocal.ch)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
'Protect Swiss waterways or lose our fish': WWF
Photo: Richi Stadelmann/WWF

Eighty-five percent of fish species in Switzerland are under threat, according to a report by the World Wildlife Fund (WWF).

SBB pilots new annual pass – costing 12,200 francs
The 'door-to-door' pass includes use of an electric car. Photo: SBB

Swiss federal railways (SBB) is looking for 100 people willing to pilot a new annual transport pass that includes use of an electric car.

Immigration to Switzerland falls as emigration rises
File photo: The Local

Immigration in Switzerland has fallen considerably this year, according to official figures.

Wawrinka aces his way into Basel quarterfinals
Photo: Fabrice Coffrini/AFP

The home favourite returns to the quarterfinals of the Swiss Indoors for the first time in five years.

Illegal immigrant dies after setting himself on fire
The victim was treated at University Hospital Zurich. Photo: University Hospital Zurich

The 45-year-old Tunisian was threatened with deportation.

Swiss government rejects call for second immigration vote
Photo: Justus Blumer/Christophe G

The Swiss government has rejected a popular initiative calling for a revote on plans to limit immigration.

Bern: companies should report salary inequality by law
File photo: Fabrice Coffrini/AFP

The Swiss government wants to force small companies to examine their rates of pay every four years.

Husband in custody after Orbe body identified
File photo: Bas Leenders

The deceased is a 55-year-old woman who lived in the house with her husband.

Presented by MoneyPark
How to get a mortgage in Switzerland
Houses in Zürich. Photo: Pixabay.

Ready to buy? Here’s what you need to know as an expat about Swiss regulations, how to finance your purchase, and why you should use a broker.

Autumn in Switzerland: ten stunning Instagram photos
Photo: Swiss Tourism/Jan Geerk

Switzerland is beautiful in all seasons, but as these photos show, autumn is a special time in the alpine country.

Photo: Unterirdisch Ueberleben
Inside Switzerland’s largest nuclear bunker – 40 years on
Sponsored Article
Last chance to vote absentee in the US elections
Photo: The Local
Ticino firefighters rescue cow from swimming pool
Photo: Antoni Da Campo
Vegan wins battle to be accepted by Swiss army
Photo: Swiss Tourism
Ten Swiss ski resorts named most expensive in Europe
Photo: Randy Kashka
Swiss women will ‘work for free’ for the rest of year
Photo: Swiss Tourism
Montreux throws hat in Olympic rings
Photo: Swiss Tourism
Seven things you’ll miss about Switzerland if you leave
Photo: Richard Juilliard/AFP
Man makes Geneva airport bomb threat ‘for a joke’
Photo: AFP
Solar Impulse team reveals plans for unmanned plane
File photo: Martin Abegglen
Swiss to vote on passport rules for 3rd gen foreigners
Photo: AFP
Swiss wingsuit hotspot Lauterbrunnen won’t impose ban
Photo: Swiss Tourism
Six reasons Switzerland isn’t as boring as you might think
Photo: Swiss Tourism
Report: Switzerland one of world’s best places for girls
Photo: The Local
Thief returns Swiss cow bells worth thousands
File photo: Wikimedia Commons
One in three rapists isn’t locked up: statistics
Photo: activistin.ch
Tampon-tax protest turns Zurich fountains red
Photo: AFP
Geneva police to lift ban on bearded officers
Photo: Marcel Gillieron/AFP
Suicide chef’s restaurant keeps Michelin stars
Photo: Lara de Salis
11 things the Swiss get tired of hearing abroad
Photo:  Ivo Scholz/Swiss-image.ch
Survey: expats in Switzerland have money but few friends
Photo: AFP
Swiss press criticize Bern’s 'capitulation' on immigration
Photo: Jura Trois Lacs tourism
German ex-policeman is Swiss city’s new hermit
Photo: Dmitry A. Mottl
Ticino votes to favour local workers over foreigners
jobs available