* Vice chairman says bank countering excessive franc rise
* Says currency intervention carries inflation risks
* Says Swiss recovery ongoing, euro zone crisis a risk
(Releads with fresh Jordan comment)
By Catherine Bosley
ZURICH, May 20 (Reuters) - Central bank intervention has stopped the Swiss franc rising excessively against the euro, though the country can cope with a stronger currency in the long term, the bank's vice chairman said on Thursday.
"Through the financial crisis there was big pressure on the Swiss franc. The franc appreciated, but the central bank acted against this upwards pressure so that there wasn't an excessive appreciation," Thomas Jordan said at a business event.
Still, current monetary policy was too expansive for the longer term as the Swiss National Bank's currency interventions carried the risk of fuelling inflation, he said.
The Swiss economy and its exporters were recovering well, a trend that also pointed to higher inflation risks. But a worsening of the debt crisis in the euro zone could usher in another recession and increase the risk of deflation, Jordan said.
"The national bank must undertake a balancing act between these two opposing risks," he said.
The SNB's main goal was to secure medium- to long-term price stability, though it had enough flexibility to respond to events on the financial or currency markets.
The SNB cut its 3-month LIBOR target to a rock-bottom 0.25 percent in March 2009 and also began intervening in the foreign exchange market to combat Switzerland's worst recession in decades.
The central bank stepped up its interventions in recent weeks as the single currency came under heavy pressure due to the euro zone debt crisis.
Jordan repeated a pledge from the central bank to shield the Alpine economy from fallout from the euro zone, which could lead to deflation in Switzerland. "Therefore it (the SNB) is countering an excessive appreciation of the Swiss franc decisively."
The franc pared some of its earlier gains after Jordan's
comments, trading at 1.4246 per euro by 1639 GMT.
CHALLENGES
The SNB will review monetary policy on June 17, when markets widely expect the central bank to keep rates on hold and stick with currency interventions.
Switzerland exited recession last summer and its economy has since performed better than many countries in the euro zone.
Despite the SNB's efforts the franc surged to an all-time high of about 1.40 per euro on Wednesday before dropping back sharply.
Jordan said exporters had coped comparatively well so far, adding that global demand and not the exchange rate were key to their success.
"An appreciation of the Swiss franc does not have to be a problem per se," Jordan said.
In the longer term, the stronger franc had forced Swiss exporters to improve their competitiveness and helped to keep interest rates low, he said.
But speculative bubbles or a crisis of confidence, leading to an overshooting, could harm the economy.
Several surveys showed on Thursday that sectors such as tourism and manufacturers were feeling the pressure from the strong currency.[ID:nLDE64J10A]
But overall, economic indicators had been pointing to a robust recovery ahead. Jordan repeated the central bank's 2010 growth forecast from March of around 1.5 percent, saying exports showed a positive trend while consumer spending also supported growth.
But should the central bank tighten too late the economy could overheat.
At the same time, however, the euro zone crisis remained a significant downside risk, so Switzerland has a "strong interest" in the EU aid package working out well.
(Writing by Sven Egenter; editing by John Stonestreet)