empty
08.03.2022 07:07 AM
Swiss National Bank pledges to stem franc's rise

The Swiss National Bank on March 7 confirmed its intention to intervene on the currency markets to curb a rise in the franc after safe-haven inflows driven by the Ukraine conflict briefly pushed the currency above parity with the euro.

This image is no longer relevant

The euro/franc exchange rate fell to 0.9910 in Asia overnight, as investors sought refuge in the Swiss currency. The valuation is the highest level for the franc since January 2015 when the Swiss central bank scrapped its peg to the euro.

"The Swiss franc is currently sought after as a refuge currency, along with the US dollar and the yen," the central bank said in a statement.

"The Swiss franc continues to be highly valued," it added. "The SNB remains prepared to intervene in the foreign exchange market if necessary."

The verbal intervention is an unusual move by the central bank, which last gave a separate statement indicating its concerns about the franc's appreciation after Britain voted to leave the European Union in 2016.

"While the SNB has been rather relaxed about the appreciation of the Swiss franc in the last months ... a drop below parity could change its attitude because parity is also a psychologically important threshold," UBS economist Alessandro Bee said.

The SNB said the increased valuation of the franc, which is a danger for Switzerland's export-dominated economy, also recognized the inflation differentials between Switzerland and other countries.

Consumer price inflation in Switzerland rose to a higher-than-expected 2.2% in February, the highest level since 2008, but well below the 5.8% level in the neighboring eurozone, Switzerland's biggest export market.

The SNB on Monday said it looked at the overall currency situation rather than individual currency pairs.

Sight deposit data, a proxy for the SNB's foreign currency purchases, showed a rise of just 500 million francs last week, indicating a small amount of intervention. Obviously, the bank is hoping with the announcement of its measures to achieve some outflow on the foreign exchange market.

"I expect the SNB to fight this appreciation only moderately – because it cannot change the environment for investors that just seek safety," J. Safra Sarasin economist Karsten Junius said.

Russia's invasion of Ukraine, which it calls a "special operation" has introduced uncertainties as the global economy looks to move towards monetary policy normalization, SNB Governing Board Member Andrea Maechler said in an interview published on Saturday.

Her comments pointed out that the crisis had delayed the SNB's plans to retreat from the negative interest rates and foreign exchange purchases, which had been the basis of its expansive approach.

The Swiss central bank gives its next monetary policy update on March 24. Obviously, if cash inflows continue, the institution will be forced to lower the franc exchange rate, otherwise exports and imports will cost the Swiss too much.

Egor Danilov,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

US Market News Digest for June 27

Major US stock indices ended the week with solid gains. The Dow Jones and Nasdaq each rose by 1%, while the S&P 500 climbed by 0.8%. Broad investor participation points

Ekaterina Kiseleva 12:56 2025-06-27 UTC+2

Nike lifts Adidas, Puma, JD Sports: The report that changed the day

Indices rise: Dow 0.94%, S&P 500 0.80%, Nasdaq 0.97% Bank stocks rise as Fed proposes to ease leverage rules Nike results lift Adidas, Puma, JD Sports Knorr Bremse falls

Thomas Frank 12:24 2025-06-27 UTC+2

US Market News Digest for June 26

Trump pushes S&P 500 toward record highs Donald Trump is fueling gains in the S&P 500, driving the index toward all-time highs amid political stability and market optimism. However, analysts

Ekaterina Kiseleva 13:07 2025-06-26 UTC+2

Markets are shaky: some are falling, others are flying — what's happening with Tesla, FedEx and Micron stocks

Tesla falls as European sales continue to slump FedEx, General Mills shares fall after disappointing profit forecasts Micron Technology jumps in extended trading after quarterly results Indices: Dow down 0.25%

Thomas Frank 09:38 2025-06-26 UTC+2

Markets Delighted by Fed Inaction: Nasdaq 100 at All-Time High

Indices Rise: Dow 1.19%, S&P 500 1.11%, Nasdaq 1.43% Nasdaq 100 Hits Record Closing High Fed Chair Powell Reiterates 'Wait and See' Approach to Rate Cuts, Tariffs Broadcom Hits Record

Thomas Frank 15:16 2025-06-25 UTC+2

US Market News Digest for June 25

AI enthusiasm fuels market gains US stocks continue their steady climb despite persistent geopolitical risks and trade tensions. The Nasdaq 100 hit a new record high amid strong demand

Ekaterina Kiseleva 12:38 2025-06-25 UTC+2

Iran-Israel peace hint rattles markets: What's happening to oil, gold and currencies

Crude oil prices slip, retreating from multi-month highs after Iran retaliates Wall Street stocks close higher, European shares fall Dollar rises against yen, falls against franc; euro recovers European stocks

Thomas Frank 14:00 2025-06-24 UTC+2

US Market News Digest for June 24

The S&P 500 and other benchmark indices have kicked off the new trading week with positive momentum, supported by technical indicators. The uptick follows a strong signal from the Marlin

Ekaterina Kiseleva 12:59 2025-06-24 UTC+2

Iran attacks exacerbate oil crisis: S&P 500 freezes ahead of key US data

US attacks on Iran raise concerns about oil, retaliation S&P 500 near February highs but showing signs of stagnation Rising oil prices raise concerns about inflation, Fed policy Investors look

Thomas Frank 12:44 2025-06-23 UTC+2

US Market News Digest for June 23

Geopolitical tensions weigh on markets Investors remain cautious amid escalating Middle East tensions, awaiting potential Iranian retaliation. While market reactions have been muted so far, further conflict escalation could trigger

Ekaterina Kiseleva 12:31 2025-06-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.