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Zurich, Switzerland (GenevaLunch) - The Swiss National Bank 12 March announced that it is taking steps to lower the Swiss franc against the euro: it is investing in Swiss franc bonds issued by private borrowers, narrowing the range of the benchmark Libor interest rate to 0-0.75% with immediate effect in order to bring interest rates lower, and it is buyng foreign currency on foreign exchange markets. The Financial Times Friday morning leads with the currency exchange move news, citing several analysts who say Switzerland could be setting off a currency war.

The Swiss central bank says it has taken the “exceptional” measures with “the aim of limiting the risk of deflation.” It argues in its press release issued Thursday that “the economic situation has deteriorated sharply since last December, and there is a risk of negative inflation over the next three years. Decisive action is thus called for, to forcefully relax monetary conditions.”

Outside Switzerland, there appears to be concern that such a move on the part of Switzerland will provoke other export-oriented countries, notably Japan, to take similar measures. According to the FT this is “the first time a big central bank has intervened in the foreign exchange markets since Japan sought to weaken the yen in 2004.”

Le Temps editorial writer Yves Genier argues Friday morning that while the move is likely to be viewed by some as a form of protectionism to help Swiss exporters, they do have the right to be protected against the consequences of their overly-attractive home currency.

The immediate impact was to push down the Swiss franc, in trading Thursday, to its lowest level against the euro in 2009.

Related: Le Temps on the SNB announcement