Investing.com - The Swiss franc fell against the euro and the dollar in choppy trade on Tuesday, reversing a rally earlier in the day amid speculation that the Swiss National Bank was intervening in the market to weaken the currency.
EUR/CHF was last down 0.51% to 1.0098 after rising as high as 1.0382 earlier. The pair had rallied more than 3% on Monday.
The euro has been floating freely against the Swiss franc since Switzerland’s central bank scrapped its three year old 1.20 per euro exchange rate cap on January 15.
The move came as prospects of quantitative easing by the European Central Bank to combat the threat of deflation in the euro area increased pressure on the Swiss franc.
The ECB unveiled €60 billion a month government bond purchasing program on January 22.
The euro is still approximately 16% lower against the franc since the SNB’S policy change.
In a newspaper interview published on Tuesday, SNB Vice President Jean-Pierre Danthine said it was still “fundamentally prepared” to intervene in currency markets, even after scrapping its cap.
“The minimum exchange rate couldn’t have been maintained anymore” with the ECB’s bond purchasing program, he added.
Figures on Monday showed that sight deposits at the SNB rose almost 8% last week. It was the largest increase since July 2013, indicating that the bank has been purchasing foreign currency in the market.
USD/CHF was down 0.49% to 0.8982, after rising as high as 0.9166 earlier.