The Swiss National Bank scrapped its minimum exchange rate today, abandoning a tool policy makers said just days ago was necessary to ward off deflation.

In a surprise move, the central bank ended its three-year-old cap of 1.20 franc per euro and reduced the interest rate on sight deposits, deepening a cut announced in December. The latest move marks an attempt by the SNB to reinforce defenses before government bond purchases by the European Central Bank.

The franc jumped to a record against the euro and rose to its highest in more than three years against the dollar following today's announcement. Swiss stocks plunged.

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