Swiss National Bank leaves deposit rate unchanged, as was expected; Franc surges

On Thursday the Swiss franc rose even higher reaching fresh one-month highs against the dollar after the Swiss National Bank left its deposit rate unchanged at a record low.

The regulator said, however, that it is ready to take further action to weaken the franc.

The dollar was stable at 0.9174, the weakest since May 18.

"The SNB takes account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy," the Bank said.

Matching analysts’ estimates, the SNB maintained its rate on sight deposits at minus 0.75%.

The central bank also did not change the target range for the three-month Libor keeping it between minus 1.25% and minus 0.25%.

Negative rates should help to weaken the currency over time, the bank said.

Those effectively mean banks are paying the central bank to hold their money.

The central bank also touched the situation around Greece saying that uncertainty about the global economy “remains high,” as the Greek threat undermines the recovery.

Switzerland does not rely on foreign investment to fund its budget, and this is the reason why the Swiss franc is considered to be a safe haven investment.

In January the Swiss National Bank cut its interest rate target into negative territory. At the same time it removed its cap of 1.20 francs per euro, which pushed the franc sharply higher.

After this move, the economy was shrinking having seen a contraction of 0.2 percent in the first quarter 2015, which ended 13 quarters of continuous expansion.

Currently, the central bank expects economic growth to hold below 1% this year, unchanged from its March forecast. According to its estimates, consumer prices will fall 1% in 2015 and 0.4% in 2016, before picking up in 2017. In March it predicted a 1.1% fall in inflation this year.