UPDATE 1-SNB far from exit of franc cap as eyes Italy-Jordan
(Adds details, background)
ZURICH Feb 27 (Reuters) - - The Swiss National Bank is far from exiting its policy of capping the strong Swiss franc, Chairman Thomas Jordan said on Wednesday, pointing to new risks from the indecisive outcome of the Italian election.
The SNB imposed a ceiling on the franc in September 2011 after investors had piled into the Swiss currency, seeking refuge from the first ravages of the euro zone's debt crisis.
However, the currency had weakened in recent months as sentiment on the crisis improved, prompting questions about when it might exit the policy.
"Instability or a development in the wrong direction, would not just hurt Italy itself, but also Europe, the financial markets and even the global economy," Jordan told the Handelszeitung newspaper in an interview.
"We are still far from an exit from the minimum exchange rate policy," he said according to a summary of the interview released ahead of publication on Thursday, adding that the franc was still overvalued at 1.20 per euro.
The SNB had to intervene heavily last year to defend the 1.20 per euro limit and the franc has risen sharply against the euro this week since indecisive Italian elections.
The country has been left without a clear governing majority, threatening economic reforms and rekindling concern over the euro zone.
Jordan again rejected suggestions that the SNB's policy was part of "currency wars" between central banks, adding the SNB had not been criticised by other central banks or the International Monetary Fund. (Reporting by Emma Thomasson; Editing by Toby Chopra)