The Swiss National Bank cuts its foreign exchange interventions in early 2021


ZURICH, June 30 (Reuters) – The Swiss National Bank spent only 296 million Swiss francs ($ 321 million) in foreign currency in the first three months of 2021, the bank said on Wednesday, drastically reducing its interventions in the market as the global economy recovers.

In contrast, the SNB spent 8.69 billion francs in the fourth quarter of 2020 and bought foreign currencies for nearly 110 billion francs over the year as a whole to weaken the franc, the strength of which poses a problem for the Swiss exporters.

The SNB was responding to falling demand for safe-haven investments like the franc as the global economy recovered from the global pandemic earlier this year, analysts said.

Still, the SNB has said it remains committed to using currency intervention as one of its tools to stem the rise in the franc, board member Andrea Maechler said this week. Read more

“We continue to have (…) our willingness to intervene as needed on the exchange rate in order to push back any undue pressure on the Swiss franc,” Maechler said on Monday. Read more

Maechler said this week that the franc remains particularly valued against the euro against the US dollar. Since the start of 2020, the franc has depreciated by 1.5% against the single currency of the bloc and by 4.2% against the dollar.

Analysts expect the SNB’s interventions to wane, especially with the eurozone recovering, supporting the euro against the franc.

“We do not expect any significant intervention over the next 12 months based on our EURCHF exchange rate forecast at 1.10 in June 2022,” said UBS economist Alessandro Bee.

J. Safra Sarasin economist Karsten Junius said: “Compared to 2020, the Swiss economy has improved its price competitiveness so that a stronger CHF than last year would be fundamentally justified. from the point of view of purchasing power. “

Junius added that his institution expected low levels of intervention in the second and third quarters, and a stable exchange rate, while the franc should appreciate in the medium term.

($ 1 = 0.9210 Swiss francs)

Reporting by John Revill; Editing by John Miller and Edmund Blair

Our standards: Thomson Reuters Trust Principles.

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