LONDON — The Swiss franc achieved a turbocharged lift Thursday after the Swiss National Bank ditched an increasingly expensive policy to limit the export-sapping rise of the currency. Within minutes of the early morning announcement, the currency spiked around a third against the euro and the dollar while Swiss shares tanked, prompting confusion and a fair degree of anger across trading-room floors.
The decision by the SNB to call time on its efforts to prevent the euro from trading below 1.20 francs was a huge surprise and came amid mounting speculation that the European Central Bank next week will back a big stimulus program that will put more euros in circulation, which would further dilute their value. That expectation has pushed the euro down to near-decade lows against the dollar.
As the outlook for the euro has darkened, the cost for the Swiss central bank of defending the peg by buying euros or selling francs has risen.
