The Swiss central bank purchased 3.9 billion Swiss francs in foreign currency assets in Q1/69 to curb the appreciation of the franc following the Iran-Iran conflict, which stimulated demand for safe-haven assets.
June 30, 2569 at 14.03:XNUMX a.m. Bloomberg News reported that The Swiss National Bank (SNB) intervened in the money markets during the first quarter of the year. To curb the appreciation of the Swiss franc, following the conflict between the US, Israel, and Iran, which prompted investors to flock to safe-haven assets.
The SNB revealed on Tuesday (June 30) that it had purchased foreign currency assets worth 3.9 billion Swiss francs, or approximately US$4.8 billion, in the first quarter. This was a move that involved selling francs into the market to curb the appreciation of the currency.
UBS analysts predicted that most interventions would occur in March, following the outbreak of conflict in the Middle East. Prior to that, the SNB had announced increased readiness to intervene in the foreign exchange market to prevent capital inflows into safe-haven assets that could cause the franc to appreciate excessively.
From the beginning of the year until mid-March, the franc continuously appreciated against the euro, strengthening by as much as 3.5% and reaching a 10-year high of 0.8981 francs per euro on March 9th, before weakening towards the end of the quarter. As a result, the overall appreciation for the first quarter was less than 1%.
Following the start of the attack on Iran, the SNB also issued a special statement saying it was ready to intervene in the market if necessary to prevent a rapid appreciation of the franc, which could affect price stability.
UBS economists estimate that the SNB likely sold around 2.5 billion francs into the market in March alone.
Even though the SNB toned down its monetary policy statement at its most recent meeting, indicating it would intervene if necessary, managing the currency remains a key priority for the central bank.
Currently, the SNB is releasing market intervention data three months late, meaning the Q2 data will be released in September.
Managing the value of the Swiss franc is crucial to its monetary policy, as a stronger franc reduces import costs and suppresses inflation. With the policy interest rate currently at 0%, this limits the available interest rate tools unless Switzerland wants to avoid a return to negative interest rates.
Switzerland's inflation rate stood at 0.6% in May, despite rising energy prices due to the impact of the Iran-Iran conflict. Economists expect inflation to slow to 0.5% in June.
However, the SNB's currency manipulation has previously angered the United States. During the Trump administration, Switzerland was listed as a currency manipulator before being removed, although it remains on the US watchlist.
side Martin Schlegel, President of SNB. The central bank confirmed that, despite pressure from the United States, it will continue to intervene in the foreign exchange market if it deems necessary to maintain economic and price stability domestically.
refer : bloomberg.com
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