The Swiss National Bank shocked traders on Thursday by removing the EURCHF exchange rate floor. The unexpected move led to exceptional moves in the currency markets. The artificial exchange cap of 1.20 EURCHF has been in place since 6 September 2011.
The volatility caused drastic moves, with minimal liquidity, as it seems that the central bank hadn’t realised the repercussions of their actions. The cap had been put in place to stem the strengthening of the Swiss Franc from safe haven flows.
Following the removal of the floor, the EURCHF dropped in an unprecedented pace to reported lows of 0.85.
At the time of writing the EURCHF pair is trading around parity 1.00.