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. 

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.  

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 www.ft.com/nbe

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:  

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.  

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 www.ft.com/nbe  

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. 

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.  

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.  

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 www.ft.com/nbe

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? 

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 www.ft.com/nbe

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.