The Swiss National Bank has shocked foreign exchange markets by setting a minimum exchange rate target of 1.20 francs to the euro, saying it would enforce it by buying foreign currency in unlimited quantities. The move immediately knocked around 8% off the value of the franc, which has soared as investors used it as a safe haven from the euro zone's debt crisis and stock market turmoil. "The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," the SNB said in a statement. The SNB said that, with immediate effect, it would no longer tolerate a rate below the 1.20 mark. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities," it said. The SNB added that even at a rate of 1.20 francs to the euro, the franc was still high and should continue to weaken over time. The franc nearly touched parity with the common currency on August 9. It fell 8.5% against the euro after the announcement to 1.203 francs. To cushion the Swiss economy from a downturn as the strong franc hurts exports, the SNB cut an already low interest rate target to zero on August 3. It is also boosting the amount of liquidity in the banking system, and had threatened further steps. Those measures had temporarily helped the franc weaken, falling some 18% to a seven-week low, but it jumped again last week as worries about the health of the global economy intensified, increasing pressure on the SNB to act again.