Investing.com - The U.S. dollar tumbled to the lowest level in more than four-years against the Swiss franc on Thursday, after the Swiss National Bank cut interest rates deeper into negative territory.
USD/CHF hit lows of 0.7462 following the announcement, before pulling back to 0.8766, a drop of 13.95% for the day.
The SNB introduced a negative exchange rate of -0.75% on sight deposit account balances from a previous rate of -0.25% in a surprise decision.
Meanwhile, EUR/CHF hit lows of 0.8204, breaking below parity for the first time in history, before trimming losses to trade at 1.0279, still down 14.41% for the day.
The drop in the euro came after the SNB surprised markets by scrapping the 1.20 per euro exchange rate floor it imposed in September 2011, in a bid to stave off deflation and prevent the continued appreciation of the safe-haven franc against the single currency.
"This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate," the SNB said in statement.
The move indicated that the SNB sees a high likelihood that the European Central Bank will implement quantitative easing measures at its upcoming meeting next week.
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Forex - USD/CHF, EUR/CHF plunge after shock SNB move
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