ZURICH—The Swiss franc rocketed beyond parity with the euro on Thursday after Switzerland’s central bank stunned markets by scrapping its long-standing cap on the strength of the currency.
The franc surged more than 20%, ending more than three years of calm in Swiss foreign-exchange markets.
The Swiss National Bank has intervened in markets since September 2011 to prevent the franc from climbing too high, acquiring billions of euros in an effort to stop the common currency from dropping below 1.20 to the franc.
In the aftermath of the SNB’s shock move, the euro plunged as low as 0.93 francs.
Europe thrown into turmoil as Swiss let franc soar
Global markets were thrown into turmoil on Thursday as a shock move by Switzerland to abandon its more than three-year-old cap on the franc sent the currency soaring and Europe's shares and bond yields tumbling.
The franc jumped by almost 30 percent in a chaotic few minutes after the 1.20 per euro cap in place since late 2011 was lifted, surging past parity to trade as high as 0.8052 francs per euro.
Over 100 billion francs was wiped off the value of Swiss stocks, their biggest daily fall in 26 years, while the pan-European FTSEurofirst 300 slumped 2 percent and Wall Street futures turned negative.
As investors scrambled for traditional safe-haven assets, there were new record low yields for Germany's government bonds and gains for the yen and gold.