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Swiss Franc Higher As SNB Refuses To Join Global Easing Trend

swissfranc sept19 lt

The Swiss franc spiked up against its key counterparts in the European session on Thursday, after the Swiss National Bank kept its key policy rate and expansionary monetary policy intact, and tweaked rules for calculating negative interest rates on sight deposits to support banking system.

In the monetary policy assessment, the SNB said it is maintaining its policy rate and the benchmark sight deposit rate at -0.75 percent. The decision was in line with forecasts.

The SNB said the Swiss franc is still highly valued.

The bank asserted its willingness to intervene in the foreign exchange market when necessary, in order to lessen the attractiveness of Swiss franc investments and thus ease pressure on the currency.

The central bank said it was changing the basis for calculating negative interest rates on sight deposits.

The adjustment would raise the exemption threshold for the banking system and reduce negative interest income for the central bank.

Data from the Federal Customs Administration showed that Switzerland's exports declined for the second straight month, while imports grew in August.

Exports dropped by real 4.4 percent month-on-month in August, following a revised 1.2 percent fall in July.

The currency performed in a mixed manner against its key counterparts in the Asian session. While it fell against the greenback and the yen, it was steady against the pound and the euro.

The franc was weaker against its most major counterparts on Wednesday. It dropped 0.2 percent against the pound, 0.4 percent against the greenback and 0.1 percent against the yen for the day.

The franc was up by 0.7 percent at 108.91 against the Japanese yen, after having declined to a 9-day low of 108.16 at 11:45 pm ET. At yesterday's close, the pair was worth 108.73. Further upward trading may take the franc to a resistance around the 111.00 area.

The Bank of Japan kept its monetary policy unchanged as widely expected, after the U.S. Federal Reserve resorted to further easing.

The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.

The franc appreciated to a 2-day peak of 0.9919 against the greenback, registering a 0.6 percent rise from a low of 0.9983 seen at 8:45 pm ET. The pair was valued at 0.9973 when it ended deals on Wednesday. Next possible resistance for the Swiss currency is located around the 0.96 level.

After edging lower to 1.1018 against the euro at 3:15 am ET, the franc rebounded 0.6 percent to hit a 2-day high of 1.0957 following the decision. The pair had finished Wednesday's trading at 1.1000. The franc is likely to test resistance around the 1.06 region, if it rallies further.

The Swiss currency was 0.6 percent stronger at a 2-day high of 1.2371 against the pound, recovering from a low of 1.2448 it touched at 3:15 am ET. The pair had ended yesterday's trading session at 1.2438. Extension of the franc's uptrend may see it testing resistance around the 1.21 level.

In today's events, the Bank of England announces its interest rate decision at 7:00 am ET. The central bank is widely expected to hold the interest rate at 0.75 percent and asset purchases at GBP 435 billion.

The U.S. weekly jobless claims for the week ended September 14 and existing home sales for August will be featured in the New York session.

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