By TraderVox.com
Tradervox.com (Dublin) – 
The SNB president Thomas Jordan in an interview to be released later that the enforcement of the currency ceiling imposed last year is appropriate to avoid deflation. He added that the bank is determined to keep the minimum exchange rate since it is the right monetary policy for the country’s economy. The remarks by the SNB President were echoed by the SNB Spokesman Walter who said the bank is doing all it can to hold the cap.
According to Swiss National Bank data, the foreign-currency reserves climbed by 20 percent in the first five months of the year as policy makers defended the 1.20 ceiling which has been beneficial to exporters and has reduced deflation. The strain on the currency increased since investors are buying it as a safe haven currency with the crisis in Europe continuing to escalate. However, the recent EU decision will help the in the SNB’s fight against deflation.
Jordan indicated that the expansion of the bank’s balance sheet is in accordance with the monetary policy and despite the risks associated with that the bank will be able to bear them. Reports from the SNB indicated that the foreign reserves climbed to 306.1 billion francs in May from April’s 247.2 billion francs.
The Swiss National Bank is buying euros which are increasing the number of francs available to the Switzerland lenders. In a statement released by the SonntagsBlick newspaper prior to publishing the full interview, SNB forecasts a safe sail in terms of inflation throughout next year. In the month prior to the introduction of the cap, the franc had increased by 17 percent against the euro causing losses in the export industry. The franc was trading at 1.20120 against the euro at the close of last month. The Swiss currency traded at 94.94 centimes against the dollar.
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