Franc Falls As SNB Introduces Negative Deposit Rate

The Swiss franc drifted lower against its major counterparts ahead of European deals on Thursday, after the Swiss National bank imposed negative rates and affirmed the currency ceiling, as currency exchange rate has been pressure amid global market turmoil.

In a surprise move, the Swiss National Bank introduced an interest rate of -0.25% on sight deposit account balances at the bank, with the aim of taking the three-month Libor into negative territory.

The target range for the three-month Libor was expanded to -0.75% to 0.25%.

"The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate," the bank noted.

Negative interest will be charged as of January 22, 2015, it said.

The central bank also reaffirmed its commitment to the minimum exchange rate of CHF 1.20 per euro, and said it would continue to enforce it with the utmost determination.

The franc dropped to 1.2084 against the euro, its lowest since October 14.

Extending early low, the franc slipped to 0.9822 against the greenback, a 1-1/2-year low.

The franc slipped to a 10-day low of 1.5304 against the pound, compared to yesterday's closing value of 1.5150.

Reversing from an early high of 122.17 against the yen, the franc slipped to a 2-day low of 120.86.

The next possible support for the franc is seen around 120.00 against the yen, 1.215 against the euro, 1.55 against the pound and 1.05 against the greenback.