MUMBAI, Nov 19 (Reuters) - The Swiss franc is still overvalued at 1.20 per euro, Swiss National Bank Alternate Governing Board member Thomas Moser said on Monday, reiterating the central bank’s stance in continuing to defend the currency.
The SNB set a cap of 1.20 per euro on the franc a year ago to ward off deflation and a recession when investors rushed to buy the Swiss currency as a safe haven from the euro crisis.
Swiss policymakers have been engaged in a campaign of ultra-low interest rates, currency intervention and money market measures to prop up an economy hurt by record-breaking gains for the franc and the euro zone’s downturn.
“As we have said in several statements, at 1.20, the Swiss franc is still overvalued, and it is still the case,” Moser said in the sidelines of a conference in Mumbai.
“The economy is still suffering, but it does not get the damage of a much higher exchange rate,” he added.
Moser also said he did not expect Switzerland to enter a recession, although he expected a slow recovery for the economy.
“In our baseline scenario, we do not see a recession even though the global economic outlook has worsened again and it affects Switzerland,” Moser said, adding he expected to see “slow growth” and a “slow recovery.”
Switzerland’s economy shrank unexpectedly in the second quarter as the crisis in the euro zone dampened demand for Swiss goods and services.
At its September policy meeting the SNB cut its 2012 growth forecast to 1 pct from 1.5 pct and kept its target range for the three-month Libor at 0.00-0.25 percent. (Reporting by Shami Paul; Editing by Kim Coghill)