The Swiss National Bank, which last month scrapped the cap it had imposed on the value of the franc, is unofficially targeting an exchange rate of 1.05 to 1.10 Swiss francs per euro, a Swiss newspaper reported on Sunday.
The SNB was operating “a kind of minimum exchange rate against the euro”, Schweiz am Sonntag newspaper said.
“The talk is of a ‘corridor’ from 1.05 francs to 1.10 francs,” the paper said. It also cited a well-informed source as saying the bank would incur losses of up to SFr10 bn, without giving a timeframe.
A spokesman for the central bank declined to comment on the story.
The SNB’s announcement on 15 January that it had scrapped its cap of SFr1.20 to the euro – the centrepiece of its monetary policy since September 2011 – unleashed a surge in the value of the currency and turmoil on the foreign exchange markets.
After the initial shock, which took it below SFr0.90 against the euro, the currency has retreated back to SFr1.0374, a level still widely seen as strong enough to force Switzerland into recession.
Three days after his shock policy announcement, SNB President Thomas Jordan was asked in a newspaper interview if the bank could bring the policy back in another form.
“We take account of exchange rates as a whole. And if the need arises, we will be active in the foreign exchange market,” he said at the time.