"This decision completely surprised the market," said told Reuters Jonathan Webb, chief forex strategist at investment bank Jefferies. "SNB probably expected the ECB to launch a program of quantitative easing next week, and with the upcoming elections in Greece becomes very difficult to maintain the exchange rate of the franc. So they were forced to abandon the maximum rate and to further reduce interest rates in negative territory. We expect the euro to trade for 0.90-1.00 francs after stabilize the market, "he added.

Economic Tsunami

"Today's decision represents tsunami for exporting firms, tourism and for the whole country," warns Nick Hickey, CEO of the manufacturer of luxury watches Swatch. Over 40% of Swiss exports go to the eurozone, which is why the surprising move of the bank received the name "frankogedon." Shares of Swiss companies plunged by over 10%, among the biggest decliners were banks - UBS and Credit Suisse lost 14% of its market value. Shares in Richemont - the company owns the manufacturer of watches Cartier, fell by 17%. The value of companies in the main Swiss index fell by a total of about 100 billion. Francs. While shares of Novartis, Nestle and Roche rose as traded in euros, which helped the pan-European FTSEurofirst 300 index to advance by more than 2%.

Currently, 1 franc trades at 0.658 Euros, which has stabilised since the spike in Mar 2009 (between 0.65 and 0.68 within 1 week!). While the Swiss National Bank (SNB) has repeatedly warned that it would act to prevent further appreciation of the franc versus the euro, concerns that a global recovery will be protracted has dimmed the outlook for the demand of Swiss goods. This means that in the medium term, the Swiss National Bank may continue to depreciate the franc in an attempt to spur demand.