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In a chaotic few minutes on markets after the SNB's
announcement, the franc broke past parity against the euro to
trade at 0.8052 francs per euro before trimming those gains to
stand at 1.0350 francs.
It also gained 25 percent against the dollar to trade at 0.8900
francs per dollar.
The SNB has been resisting heavy pressure in recent months on
the cap it imposed in September 2011 on the stellar rise seen in
the franc's value due to investors seeking a haven from the euro
zone's economic and political troubles.
The prospect of outright money-printing by the European Central
Bank as early as next week has added to the pressure, with the
SNB seen by players in the market as buying euros consistently
around 1.2009 francs per euro in recent days.
"It has taken the market by complete surprise," said Jonathan
Webb, head of FX strategy at Jefferies in London.
"The SNB probably expects the ECB to launch QE next week and
along with the Greek elections coming up, it would make it
pretty tough on the Swiss to keep bidding the euro. So they have
abandoned the cap and cut rates deeper into negative territory.
We expect euro/Swiss to trade around 0.90-1.00 francs after all
the stop loss orders have been cleared."
(Reporting by Patrick Graham; editing by Nigel Stephenson)
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