EUR/CHF is trading firmer after the Swiss Nation Bank intervened in the currency markets, which was confirmed by the bank’s chairman, Jordan. The cross had dove to a 1.0314 low in Asia amid the broad euro decline as markets reacted to the weekend’s news about Greece. A subsequent, post-intervention high was left at 1.0438, and the cross has since settled around 1.0400. The SNB won’t likely be thinking about turning the trend around, but rather tactically intervening in an attempt to deter the market from establishing a one-sided bias. Jordan said that it intervened in a difficult situation and that the SNB is not unprepared for a Greek euro exit scenario.
He went on to say that a Greek default would be an extremely difficult situation for Greek banks and that questions about the union must be asked if Greece leaves the Eurozone. Jordan stressed, however, that the SNB is not unprepared for Greek exit. The Swiss central bank always stressed it would be active in forex markets again if needed and with Greek concerns hitting Eurozone markets, the central bank’s action is maybe not a real surprise.
Greece on Monday introduced capital controls, and closed banks. Greek PM Tsipras confirmed that banks will remain for now and Greece’s central bank will introduce capital controls. There are also reports that the Greek stock market did not open Monday. The ECB decided Monday not to increase Greek ELA assistance further, which means the deposit withdrawal at Greek ATMs over the weekend, cannot be covered with further emergency assistance and a widening of the Bank of Greece’s Target imbalance. So the step, which many recommended for some time, amid the ongoing capital outflows and deposit withdrawal, finally became inevitable.
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