The Swiss National Bank is on alert and ready to “intervene more strongly”after an intense battle earlier this year in response to the franc’s advance to a five-year high against the euro.
SNB President Thomas Jordan and his colleagues said the currency is “highly valued,” as they left the policy rate and deposit rate unchanged at a record-low -0.75%. They also announced they will publish details of their interventions more regularly, a possible move to head off the U.S., which has been critical of its currency market activity.
Switzerland’s dual tack of negative rates and interventions is now in its sixth year, as officials try to prevent inflows of capital that push up the franc and increase deflationary risks. The SNB faced a tough battle in the first half of 2020, though the currency has eased somewhat in recent months, thanks in part to the European Union’s historic spending package.
“No surprises — the most important elements remained unchanged — also the wording,” said UBS Group AG economist Alessandro Bee.
The franc slipped a touch against the euro following the policy decision and was trading at 1.0780 per euro at 9:51 a.m. in Zurich.
The currency remains vulnerable to a number of risks, including Brexit and the U.S. presidential election. Also hanging over Switzerland is a U.S. Treasury report that could classify the country as a currency manipulator, potentially inviting speculators to test the SNB’s resolve to intervene. The SNB will start publishing intervention data quarterly, rather than just provide a once-a-year update.
*SNB TO PUBLISH CURRENCY INTERVENTION DATA QUARTERLY
This is big! Likely as US administration has pushed Switzerland into greater FX transparency $CHF
GIF9:49 AM · Sep 24, 2020
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