Swiss Franc Little Changed After SNB Opts For Status Quo
- The Swiss Franc was little changed versus its major currency counterparts
- SNB keeps Sight Deposits Rate unchanged at -0.75%
- SNB 3-Month Libor Target Range unchanged at -1.25% to -0.25%
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The Swiss Franc was little changed versus it’s major currency counterparts (at the time this report was written) after today’s SNB rate decision saw interest rates unchanged at record low negative -0.75 percent on sight deposits, as was expected by economists. The SNB also kept the 3-Month Libor Target Range unchanged at -1.25 percent to -0.25 percent, also as expected.
Looking into the press release, the SNB commented that the negative interest rates help weaken the Swiss Franc and that they will remain active in the foreign exchange market in order to influence the exchange rate situation as necessary. The SNB also kept its inflation forecast for 2016 at negative 0.5 percent while its 2017 projection was lowered to 0.3 percent. The SNB forecast that growth will be at 1.5 percent next year.
Speculation rose prior to the ECB rate decision last week that the SNB will have to react, either by a rate cut and/or FX intervention, on further Euro weakness. The strength of the Franc, and in particular against the Euro, has been a burden on the Swiss economy, hurting exports because of the trading relations between Switzerland and the Euro-Zone. After the ECB’s decision seemingly fell short of market expectations, the SNB was supposedly in a better position to opt for status quo in this decision, and keep rates on hold. As the decision was widely expected, the Swiss Franc was little changed.
USDCHF 5-minute Chart
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