Nomura’s European economics team anticipates that the Swiss National Bank (SNB) will continue to emphasize its elevated willingness to intervene in foreign exchange (FX) markets, despite the recent depreciation of the Swiss Franc (CHF) against the Euro (EUR) since March [1]. The team views FX intervention as a key tool for the SNB to counter disinflationary pressures and manage risks associated with the Iran war [1].
Recent statements from SNB policymakers reinforce this stance. Chairman Schlegel, in remarks on June 3, highlighted that the Iran war could increase pressure on the franc and reiterated the SNB’s increased willingness to intervene in FX markets. Similarly, Antoine Martin, Vice Chairman of the Governing Board, noted on May 21 that the SNB has an elevated willingness to intervene [1].
Nomura expects the SNB’s June meeting statement to again express this increased willingness to intervene in the FX market. Additionally, the SNB is set to release data at the end of the month on FX interventions during Q1, which Nomura believes will likely show increased operations aimed at countering previous CHF strength [1].
The appreciation of the CHF over recent months is believed to have exerted downward price pressure on certain imported goods, such as clothing. The SNB has previously emphasized that CHF appreciation could help offset potential second-round inflation effects from rising energy prices, which is why its medium-term inflation forecast remained largely unchanged following the Iran war in March [1].
CONCLUSION
Nomura expects the SNB to maintain a strong intervention stance in FX markets, particularly in light of ongoing geopolitical risks and disinflationary pressures. Market participants should watch for the SNB’s June meeting statement and upcoming Q1 intervention data for further signals on policy direction.