SNB FX Intervention to Contain CHF Surge
(4 May 2020 – Europe) The Swiss National Bank (SNB) has abandoned a laissez-faire approach to foreign exchange (FX) markets to contain the recent surge in the Swiss Franc (CHF).
The currency is renowned for being a safe haven currency in times of economic crisis. The total value of deposits commercial banks have deposited with the SNB rose from Fr 650.651 billion to Fr 663.771 billion in the space of a week. This has followed a Fr 13.2 billion rise in the value of deposits from the week before. These drastic leaps in commercial bank deposits indicates a sharp rise in FX purchases which the SNB have targeted for reduction in order to maintain a stable balance of trade and support exporters.
“Large scale interventions were likely to remain the SNB’s main tool to restrict the franc’s appreciation, rather than cutting its policy rate of minus 0.75 percent” stated Credit Suisse Economist Maxime Botteron.
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