The Swiss and Japanese banks have both taken a hard stance in the wake of excessive security-buying of their currencies.The Swiss National Bank (SNB) interim president Thomas Jordan has recently stated that the bank will enforce a minimum rate of 1.2 Swiss francs per euro, and is ready to buy unlimited amounts of foreign currency in any global interbank market to do so.In Japan, action has already been taken to curb the appreciation of the yen, with recent data confirming a stealth intervention by Japanese authorities in the foreign currency market. The intervention of ¥8.072 trillion on October 31st, its biggest ever single-day intervention, and ¥1.019 trillion in the four days afterward pushed the dollar up and stabilised the local currency. Similar action is likely to take place in Switzerland, unless the market cools down and confidence is restored in the riskier currencies.
Mr Jordan said in a text prepared for delivery at a Swiss-American Chamber of Trade & Commerce function Tuesday: "We won't tolerate any trading below the minimum rate in the relevant interbank market, and this commitment applies at any time, from the moment the market opens in Sydney on Monday to when it closes in New York on Friday."For more information on foreign exchange treasury services and risk management, visit our Corporate FX site