SNB leaves interest rates unchanged at record-lows, aims to keep check on overvalued franc

The Swiss National Bank (SNB) left its benchmark interest rate unchanged at record-low levels, with an aim to keep a check on the overvalued Swiss franc.

SNB maintained its target band for 3-month Libor at -0.25 to -1.25 percent and the interest rate it charges on sight deposits at -0.75 percent. The bank said it will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.

The central bank reiterated that the Swiss franc is still significantly overvalued. The bank added that the negative interest rate and the SNB's willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency.

"Besides, an overvalued currency, there are a multitude of political uncertainties which are particularly associated with the future course of economic policy in the U.S., upcoming elections in several countries in the euro area as well as the complex and arduous exit negotiations between the UK and the EU," Reuters reported, citing the central bank’s statement.

The franc held steady against the greenback with the trading at 1.0240, following a decline to nearly 11-month low of 1.0256 in the Asian session. The pair was valued at 1.0201 when it finished Wednesday's trading. The Swiss currency retreated to 1.0751 against the euro, off a 3-day peak of 1.0727 set early in the Asian session.