The euro dropped to its lowest level since November 2003 on Thursday after the Swiss central bank announced that it would give up its minimum exchange rate of 1.20 Swiss francs per euro.Eurobond

The euro intermittently fell to 1.1575 dollars, down from Wednesday’s rate of 1.1735 dollars.

Switzerland had been buying euros in order to prevent the franc from becoming too strong and hurting its export industry.

Demand for the euro fell after the Swiss decision.

The Swiss National Bank (SNB) said in a statement that although the franc was still high, its overvaluation has decreased because the depreciation of the euro against the dollar means that the franc has also weakened against the US currency.

“In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified,” the central bank said.

In its effort to weaken the franc, SNB had increased its foreign currency assets to 495 billion francs by the end of December, a strategy that greatly increased the bank’s exposure to currency fluctuation risks.


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