Swiss franc fell to lowest level vs euro after SNB's vice president said it has plans to intervene in markets

The Swiss currency fell to its lowest level against the euro since the Swiss National Bank abandoned its exchange-rate cap as the SNB’s vice president Jean-Pierre Danthine reiterated it is to intervene in markets.

“We’re fundamentally prepared,”  Danthine said in an interview with Tages-Anzeiger newspaper on Tuesday. The Tribune de Geneve and 24 Heures newspapers published similar comments. Danthine told the latter that the current euro-franc exchange rate wasn’t justified.

The franc had traded near parity against the euro since the SNB sent ripples through markets on Jan. 15 by abandoning its cap of 1.20 francs per euro and increasing a charge on deposits. That pushed the currency as much as 41 percent higher against the euro to the strongest level on record.

The Swiss currency declined 1.2 percent to 1.02721 francs per euro at 9:30 a.m. London time and touched 1.03826, the weakest since Jan. 15. It reached a record-high 85.17 centimes on Jan. 15. The 19-nation shared currency added 0.7 percent to $1.1310, as Bloomberg has reported.

“The market is on full alert for intervention,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “Indeed, the SNB is saying they could intervene at any time. But there’s no confirmation, just speculation.”

“The move on euro-Swiss is grabbing attention,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London.

“It’s generating a bigger euro move. It’s unclear but obviously there’s going to be a lot of discussion around what the SNB is going to do next. I don’t think there’s enough here to suggest any clear influence.”

SNB Spokesman Nicolas Haymoz declined to comment on speculation the SNB was intervening in markets.

“The euro is finding buyers across the board so this could be more of a short squeeze. Some are citing comments by Danthine but I doubt that would push euro-Swiss higher. It’s more like franc traders seeing shadows," said Peter Rosenstreich, head of market strategy at Swissquote Bank in Gland, Switzerland.