Rabobank's Senior FX Strategist Jane Foley reports that the Swiss National Bank (SNB) has actively intervened in foreign exchange markets to counter safe haven inflows into the Swiss Franc, particularly since the onset of the Iran war. According to SNB data, the central bank sold CHF in the first quarter of this year, with reports indicating that the SNB purchased CHF 3.9 billion worth of foreign currency during this period, confirming that intervention took place [1].
Last week, SNB President Schlegel reiterated the central bank's readiness to intervene in the market if necessary, emphasizing that FX intervention remains a key policy tool. The SNB aims to discourage speculative buying and prevent further appreciation of the Swiss Franc, especially given the current environment of low inflation and modest growth risks [1].
Rabobank expects the SNB to maintain its focus on FX intervention rather than immediate rate hikes. However, the risks of a rate hike could increase if the European Central Bank (ECB) maintains a hawkish stance, though the potential for tightening remains finely balanced due to the continued relative strength of the CHF [1].
CONCLUSION
The SNB's recent actions and statements underscore its commitment to managing Swiss Franc strength through FX intervention rather than immediate rate hikes. Market participants should monitor the SNB's policy signals closely, as future moves will depend on both domestic conditions and external central bank actions.