In this topsy-turvy new world of ours, it’s reassuring to know that some things stay the same. For example, the Swiss National Bank, which maintained its expansionary monetary policy at today’s policy meeting. With the Swiss franc always in demand, the SNB can afford to treat its customers with deposit rates of -0.75%, by far the lowest rate of any major central bank.
SNB says willing to intervene with exchange rate
The war in Ukraine has bolstered the Swiss franc’s status as one of the leading safe-haven currencies. The crisis has resulted in capital inflows that have put upward pressure on the Swiss franc. This poses a problem for the SNB, which does not like to see the currency in disorder. The Bank’s Monetary Policy Assessment (MPA) noted that the central bank remained “willing to intervene in the foreign exchange market as necessary, in order to counter upward pressure on the Swiss franc.” The fact that the SNB took pains to state this in the MPA sends a stern message to speculators that the Bank will intervene in order to keep the Swiss franc from rising in value, which would damage the economy by making Swiss exports more expensive.
Switzerland has not been immune from rising inflation, but CPI has been climbing more slowly than in the eurozone. The headline rate broke above the 2% level in February, for the first time since October 2008. Growth was anemic in Q4, at just 0.3% QoQ, compared to 1.9% in the third quarter. The Swiss economy was hampered by the Covid wave and the ensuing health restrictions.
USD/CHF Technical
- There is resistance at 0.9396, which has held since April. Above, there is resistance at 0.9482
- There is support at 0.9167 and 0.9024
