Euro Falls After SNB Discontinues Currency Ceiling

Canbera-Australia (Jan 15)  The euro fell against the other major currencies in the early European session on Thursday, as the  Swiss National Bank  unexpectedly decided to discontinue its currency ceiling and took interest rate further into negative territory.

In a statement released Thursday, the SNB said it is discontinuing the minimum exchange rate of  CHF 1.2  per euro. The bank introduced the ceiling in  September 2011  when the Swiss franc was exceptionally overvalued.

The bank today lowered the target range for the three-month libor to -1.25% to -0.25% from the current -0.75% to 0.25%.

The SNB also lowered the interest rate on sight deposit account balances that exceed a given exemption threshold by 0.5 percentage points, to -0.75%.

The euro fell to more than a 11-year low of 1.1579 against the US dollar, near a 7-year low of 0.7623 against the pound, more than a 3-year low of 1.1755 against the Swiss franc and near a 2-1/2-year low of 1.5010 against the NZ dollar, from early highs of 1.1792, 0.7873, 1.2010 and 1.5288, respectively.

Pulling away from an early high of 138.78 against the yen, the euro slipped to near a 3-month low of 135.69.

Against the  Australia  and Canadian dollar, the euro dropped to more than a 3-month low of 1.4179 and a 2-month low of 1.3879 from early highs of 1.4486 and 1.4105, respectively.

If the euro extends its downtrend, it is likely to find support around 1.14 against the greenback, 0.75 against the pound, 1.16 against the Swiss franc, 1.49 against the kiwi, 134.00 against the yen, 1.37 against the aussie and 1.37 against the loonie.

Source: RTTnews