SNB still aims to prevent excessive franc rise-paper

* SNB chief Hildebrand says euro zone crisis worrying

* Says SNB will not allow deflation due to franc strength

* Says SNB will have larger currency reserves longer-term

* Says uncertainties surrounding economic outlook very big

ZURICH, May 9 (BestGrowthStock) – The Swiss National Bank is still
aiming to prevent too sharp a rise in the Swiss franc in order
to avoid deflation in the Alpine economy, central bank chairman
Philipp Hildebrand said in a newspaper interview.

Hildebrand repeated the SNB’s intervention stance in the
interview with the NZZ am Sonntag only three days after the
franc hit a record high against the euro when the SNB stepped
away from the market following a month of continous, massive

The worries about Greece and fiscal woes in other euro zone
countries were weighing on the euro, Hildebrand said.

“Problems with stability in the euro zone automatically
affect Switzerland negatively and are therefore very worrying
to all of us,” Hildebrand said.

The SNB’s aim was to avoid deflation as well as inflation,
he said.

“That defines our policy with regards to the exchange rate:
We will not allow that the euro zone problems and an excessive
rise in the franc linked to them will lead to deflation in
Switzerland,” he said.

The franc hit a record high on Thursday at 1.40 per euro
after the central bank had kept the exchange rate stable at
around 1.4320 for over a month.(EURCHF=: )

Economists said the central bank had to allow some rise in
the franc as the massive interventions created more liquidity
at a time when the Swiss economy was on track for a strong

When asked if the SNB could buy euros without limitations,
Hildebrand said currency reserves had been too small before the
crisis given the size of the Swiss financial industry.

“We expect that we will hold larger currency reserves in
the longer term than before the crisis,” he said. “Monetary
policy needs will define how big the build-up will be.”

Hildebrand said the dynamic of the economy had been solid
over the last months, in Switzerland as well as in the United
States and in emerging countries.

“Two questions remain,” he said. “How much of the growth
dynamics is due to the monetary and fiscal stimulus measures?
And how big will the impact from the euro zone problems be?”

“The economic outlook is fraught with very large
uncertainties due to these factors,” Hildebrand said.

The SNB forecast economic growth of around 1.5 percent for
2010 in its latest policy review in March and all indicators
point to a strong economic recovery so far.

Stock Market Today

(Reporting by Sven Egenter; Editing by Sugita Katyal)

SNB still aims to prevent excessive franc rise-paper