Swiss National Bank

Claire Jones

Will the Swiss National Bank lower the cap on the euro further in the new year? It might have to if it wants to keep companies in the country happy.

The SNB’s latest exchange rate survey, which the central bank compiles quarterly, shows that an even higher proportion of businesses are struggling despite the introduction of the cap at the beginning of September. Read more

Claire Jones

The trials and tribulations of the Swiss may seem piffling compared with the woes of their eurozone neighbours.

But the franc’s strength, coupled with weak global demand, is hurting the country’s businesses. This from the FT’s Haig Simonian:

Exporters, hoteliers and retailers have howled as the strong currency has hurt sales. Hotel booking have plunged and look set to drop further in the winter season as foreign tourists stay away. Retailers have seen shoppers defecting across the border and exporters say they have retained market share only by slashing margins or even selling at a loss.

The Swiss National Bank’s decision to keep the floor on the franc’s appreciation against the euro constant at Sfr1.20 today will have no doubt disappointed them. Especially when there were many reasons for the central bank to act.

The SNB has instead favoured a wait-and-see approach, hoping that the eurozone turmoil doesn’t worsen and that the franc’s depreciation against the single currency continues of its own accord.

But the central bank suggested that, if the franc does not weaken further against the euro in the coming months, then it is likely to act.  Read more

Claire Jones

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FOMC meeting

The highlight of next week’s calendar is Tuesday’s Federal Open Market Committee meeting.

Here’s the FT’s US economics editor Robin Harding on what to expect:  Read more

Claire Jones

It appears that last week’s coordinated action has had the desired effect.

Demand for the European Central Bank’s dollars has surged. There were also takers elsewhere, with the Swiss National Bank’s swap line tapped for the first time since mid-August.  Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit  Read more

Claire Jones

The Swiss National Bank’s decision to cap the franc’s gains against the euro was a big gamble.

However, the SNB’s interim results for the year to September, out today, show that – so far – it’s paying off. For the first time this year, the central bank is back in black. And that’s partly down to the cap.

The results also offer some clue as to the size of the SNB’s interventions into foreign exchange markets. Read more

Claire Jones

The Swiss National Bank’s forays into the foreign exchange markets have – along with the appreciation of the franc – led to spectacular losses, which in turn have provoked the ire of some of the country’s politicians.

One of the reasons why is that the central bank has traditionally paid out Sfr2.5bn each year to the Swiss confederation and the country’s cantons, which own the majority of the SNB.

The losses have thrown that into doubt. With the central bank announcing a paper loss of Sfr10.8bn for the first half of 2011, will it pay out? The message from Thomas Jordan, the SNB’s vice chair, today: don’t count on it.  Read more

Claire Jones

That the strong Swiss franc was hurting the country’s exporters has been well documented.

But an article in the Swiss National Bank’s quarterly bulletin, out today, offers further evidence of why the central bank felt compelled to “go nuclear” and announce a cap on the franc’s appreciation against the euro.  Read more

Claire Jones

Our week ahead email will help you to track the most important events in the central banking world. To see all of our emails and alerts visit

The majority of the world’s central bank governors and finance ministers are in Washington, DC this weekend for the IMF/ World Bank Annual Meetings.

Will there be any more policy coordination following the G-20 communiqué released late Thursday? Read more

Claire Jones

Our week ahead email will help you to track the most important events in the central banking world. To see all of our emails and alerts visit

Rate votes

The key event in next week’s calendar is the Federal Open Market Committee’s policy meeting, which Ben Bernanke announced at Jackson Hole would be a longer-than-usual two-day affair. Read more

Claire Jones

Now that the Swiss National Bank has said it will cap the franc’s appreciation against the euro, investors are on the lookout for a new safe haven currency.

Attention has turned to the Norwegian krone, with the currency hitting an eight-and-a-half year high of NKr7.4825 against the euro on Wednesday.

Though Øystein Olsen, the governor of Norges Bank, was clear that the central bank would not for now intervene, he did acknowledge that an appreciation could weaken domestic growth.

With interest rates at 2.25 per cent, the central bank has room to loosen policy if the krone’s appreciation proves too heady. But – some argue – it may not have to bother.  Read more

Ralph Atkins

The European Central Bank distanced itself on Tuesday from the Swiss National Bank’s plans to combat the overvalued franc by linking it to the euro. With the SNB likely to acquire substantial piles of euro assets as a result of its intervention, one fear is that it will worsen tensions in eurozone debt markets by buying only AAA bonds. Italy’s spreads versus Germany would rise further.

But maybe it would be in the SNB’s interest to help the ECB? By buying lower quality bonds, the Swiss central bank could display a level of recklessness  that might convince financial markets of its determination to do whatever is necessary to weaken the franc. Moreover, given the franc is now linked to the euro, the SNB has a greater interest in a stable eurozone. “What would be great now would be if the SNB bought €50bn in Italian bonds – it would be good for everyone,” quipped one trader.

Claire Jones

It was a while coming, but the Swiss National Bank has finally done what was needed for it to have a decent chance of halting the franc’s appreciation.

The SNB on Tuesday said it would set a minimum exchange rate of Sfr1.20 to the euro.  In order to maintain the peg, it is prepared to buy foreign currency “in unlimited quantities”. Though this could well result in steep paper losses – and so anger its owners, the SNB is right to act.

There are two reasons why. Read more

Claire Jones

When confidence is shot, policy must get ahead of the curve if it is to count. Do less than markets expect, and there is a decent chance that measures will have the opposite impact to what policymakers were hoping for.

Which is one of two reasons why the Swiss National Bank’s latest move to counter the franc’s appreciation has backfired. This from the FT’s Peter Garnham:

The Swiss franc rose sharply on Wednesday after the Swiss National Bank’s latest attempts to stem strength in its currency disappointed investors.

The Swiss franc climbed 1.4 per cent to SFr1.1318 against the euro, added 1.5 per cent to SFr0.7848 against the dollar and gained 1.7 per cent to SFr1.2886 against the pound.

 Read more

Claire Jones

A week is a long time in currency markets. Seven days after the Swiss National Bank announced a set of measures to curb the franc’s rise, it is at it again.

Analysts were unconvinced last week’s measures would work. They are sceptical this time around too. It is also unclear what other policy options the central bank has.

The SNB said this morning that it was injecting another Sfr40bn-worth of liquidity by expanding banks’ deposits held at the central bank. It would also conduct foreign-exchange swap transactions in a further bid to increase Swiss franc liquidity. The move came after the franc shot up by – at one point – more than 6 per cent on Tuesday after the Federal Reserve’s committed to keep rates on hold for the next two years, though the Swiss authorities were already considering actionRead more

Claire Jones

The Swiss authorities are considering several options to curb the franc’s appreciation. Among them negative nominal interest rates. This from the FT’s Haig Simonian in Zurich:

The Swiss government met for a third unscheduled session in short succession on Monday as ministers grappled with curbing the surging Swiss franc.

No details on any potential measures were expected until Tuesday, but Switzerland’s leaders have been bombarded by suggestions ranging from central bank intervention, negative interest rates, capital controls and even emergency tax cuts to help beleaguered exporters.


Three-month interbank futures contracts for December were trading at a high of 100.01 as of Thursday, meaning that some are now predicting Swiss rates will turn negative. Read more

Claire Jones

Central bankers this week have acted on fears that the global outlook could weigh on domestic growth.

The Central Bank of Turkey’s shock decision on Thursday to cut its policy rate to an all-time low in the face of strong growth and above-target inflation shows just how pronounced those fears are.

Japan and Switzerland have both attempted to counter their currencies’ rapid appreciations over recent weeks, which have occurred on the back of events in the US and the eurozone.  Read more

Claire Jones

The Swiss franc has gone a little bonkers in the past few weeks.

The franc was already at record highs as a result of the eurozone crisis. But the shambles in the US  and recent suggestions Japan will intervene to stem the yen’s gains  have accelerated the pace of the Swiss currency’s gains.

Concerned that this will only add the woe of the country’s exporters, the Swiss National Bank today took action. But in such uncertain times, even saying you will cut rates “as close to zero as possible”, and pledging to intervene if appreciation continues, counts for little. This from the FT’s Peter GarnhamRead more

Claire Jones

The Swiss central bank on Wednesday unexpectedly cut interest rates and said it will increase the supply of francs to money markets in order to stem the rapid appreciation of the Swiss currency.

The SNB said in a statement that the franc was “massively overvalued”, prompting speculation the central bank would intervene by selling Swiss francs and buying euros and dollars to weaken the currency. Read more

“Absent significant shock, notably on the currency, the SNB should be in the position to start tightening the policy rate in the near term.” This from the IMF, as it raised its growth forecast for the Swiss economy to 2.4 per cent this year, after 2010 growth exceeded expectations. The Swiss National Bank has maintained a near zero rate since January 2009, officially targeting a three-month Swiss franc Libor rate of 0-0.75 per cent.

Mortgage lending standards should also be tackled with better regulation, says the IMF, arguing: “The development of lax lending standards in the mortgage market and increasing interest rate risk call for pre-emptive measures.” While a rate rise should work to reduce mortgage lending, its effects would be “limited”, so “concerns related to mortgage lending should be addressed by macro-prudential instruments.” Read more