Worried about its national currency, the franc, losing too much of its value as both it and the euro fall against the U.S. dollar, the Swiss government has recently removed a 2011 cap placed on the franc against the euro to protect it from further losses amid rising global financial pressures.
“Recently, divergences between the monetary policies of the major currency areas have increased significantly — a trend that is likely to become even more pronounced,” the Swiss National Bank announced Jan. 15 in a press release.[PDF]
“The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar,” the bank said. “In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.”
That announcement and the bank’s actions led to a round of volatile trading in world markets. Following that announcement, the franc spiked some 30 percent, reports said, and the Swiss may have lost as much as $60 billion in a single day — perhaps the world’s largest daily loss ever, according to ZeroHedge.com.by