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Swiss central bank stays firm on currency cap

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Swiss central bank stays firm on currency cap
15:50 CET+01:00

Switzerland's central bank said Tuesday it would fight any appreciation of the already strong Swiss franc, which has in recent days edged closer to the bank's cap of 1.20 francs per euro.

"This commitment applies at any time, from the moment the market opens in Sydney on Monday to when it closes in New York on Friday," said Swiss National Bank (SNB) vice chairman Thomas Jordan.

"We will not tolerate any trading below the minimum rate," he said in a speech at the Swiss-American Chamber of Commerce in Geneva.

Jordan stressed the bank's readiness to buy unlimited amounts of foreign currency and take further measures if necessary.

The franc, considered a safe haven in times of financial turbulence, posted a sharp gain in value last year, going from 1.23 per euro at the beginning of July to less than 1.05 a month later. The franc was at 1.2088 to the euro in afternoon trade Tuesday.

The strong currency was biting into exporters' earnings and the central bank imposed a 1.20 cap in September.

The vice president said a solution to the eurozone debt crisis would help reduce demand for the currency.

"If the European authorities were to credibly commit to a sustainable solution soon, existing uncertainties would be reduced substantially," said Jordan.

"In such a scenario, demand for perceived safe financial assets would fall in general, and for the Swiss franc in particular."

The SNB predicts the Swiss economy will slow considerably this year to 0.5 percent growth, down from the expected 2011 figure of 1.5 to 2.0 percent.

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