Swiss franc today has grown in value by 30 percent after the Central Bank of Switzerland decided to abandon the fixing the value of the franc against the euro.
Swiss National Bank (SNB) says that the measure for fixing the franc, introduced in September 2011 is no longer valid. SNB also cut its benchmark interest rate from -0.25 percent to -0.75 percent, which increases the amount that savers have to pay if they want to have deposits in Switzerland.
Director of the International Monetary Fund, Christine Lagarde, said that she was surprised by the move and that Governor of SNB didn’t notify her and expressed hope that this step was discussed with the other governors of the central bank.
After the action SNB, the euro which was bought for 1.20 francs fell to 0.8052 francs, but then recovered to 1.04 francs.
Swiss exchange offices yesterday were full of people trying to buy euros to try to profit from any future normalization of course. The biggest benefit from the growth of the franc had people who live in the border regions of Switzerland, where their income grew by 30 percent in one day.
However, increasing the value of the franc is a shock for the Balkan citizens who have loans tied to the Swiss franc. About 10,000 Bosnians, 22,000 Serbs, 60,000 Greeks and 100,000 Croats have loans tied to the Swiss franc. Increasing the value of the franc means increase of the monthly installment of the loan. The same happened in 2009, when, due to the rising value of the franc, citizens struggled to repay loans tied to the Swiss currency for several years.
In accordance with the rate of the Central Bank, the Swiss franc is now sold at an average value of 59.83 denars per franc, which is 8.6 denars more than yesterday.
