Swiss franc falls on SNB negative rate move

A cyclist rides past the Swiss National Bank's headquarters in Bern, Switzerland.
Gianluca Colla | Bloomberg | Getty Images
A cyclist rides past the Swiss National Bank's headquarters in Bern, Switzerland.

The Swiss franc hit its lowest level against the euro since mid-October on Thursday and its lowest against the dollar in over two years after the Swiss National Bank cut interest rates to below zero.

The SNB announced Thursday it would set an exchange rate of -0.25 percent on sight deposit account balances at the central bank.

The franc weakened to a low of 1.2098 per euro on trading platform EBS and was last trading down 0.5 percent at 1.20675, edging away from the SNB's three-year old cap of 1.20 francs per euro. The franc fell to 0.9848 per dollar, a level not seen since August 2012.

In recent weeks, the franc has edged closer to its 1.20 per euro ceiling as the euro weakens on expectations the European Central Bank will launch full-blown quantitative easing early next year.

Read MoreSwiss National Bankcould supercharge ECB bond-buying

The SNB said it would expand the target range for three-month Libor to -0.75 percent to 0.25 percent. It plans to levy a negative interest rate on balances above 10 million Swiss francs.