Switzerland moves to negative interest rates to cap franc's gains

For those who complain about the pathetic interest rates in Hong Kong, spare a thought for the Swiss.

Switzerland's central bank yesterday announced it was introducing negative interest rates to stop the franc getting any stronger, after the Russian rouble crisis sent investors pouring their investments into the safe-haven currency.

The Swiss National Bank will impose a rate of minus-0.25 per cent on certain bank deposits from January 22, with the aim of pushing the target range of Switzerland's benchmark interest rate into negative territory.

"The Swiss franc has been experiencing renewed upward pressure vis-a-vis the euro in the last few days," said Thomas Jordan, chairman of the SNB governing board.

"Rapidly mounting uncertainty on the financial markets has substantially increased demand for safe investments. The worsening of the crisis in Russia was a major contributory factor in this development."

The rouble crashed to historic lows this week of 80 to the US dollar and 100 to the euro, as the energy-export dependent economy was hit by a rout in oil prices.