ii. Value of the Swiss franc Part 2 - Managed Exchange Rates 7. The Swiss National Bank wishes to reduce fluctuations in the value of the chf against the US$, and decides to set a maximum exchange rate for the chf at $1.10 per chf and a minimum at $0.90 per chf. Show these maximum and minimum exchange rates in the graph below as horizontal lines. Include today's equilibrium exchange rate on the graph. chf in the US 8. Rising incomes in the US lead Americans to demand more Swiss imports, causing demand for chf to rise. The equilibrium exchange rate rises to $1.20 per chf. On the graph above, show the increase in demand and the new equilibrium exchange rate of the chf in the US. 9. As your graph shows, the new equilibrium exchange rate of $1.20 per chf is higher than the maximum exchange rate established by the SNB. Outline how the SNB could use the following two tools to enforce its maximum exchange rate of $1.10 per chf. Explain the process by which each tool would achieve the SNB's objective. a. Interest rates