Sam Jones in Zurich and Eva Szalay in London , 15 January 2020
The Swiss franc nudged up to a near three-year high against the euro on Tuesday as markets anticipated the move would limit the Swiss National Bank’s appetite for aggressive action to try to hold down its currency in future.
“The report is a warning shot to the SNB,” said George Saravelos, global co-head of currency research at Deutsche Bank, adding that the franc is likely to push higher from here. It now trades around CHF1.08 against the euro.
The US called on Bern on Monday to “more forcefully support domestic economic activity” by spending money and reducing the country’s already low tax burden, in what was an unusual swipe at a sovereign nation’s financial affairs. “Despite borrowing costs for the Swiss government being among the lowest in the world, fiscal policy remains underutilised, even within the constraints of Switzerland’s existing fiscal rules,” the US Treasury said in its assessment.
The SNB said on Tuesday that its interventions were transparent, and “motivated purely by monetary policy . . . aimed at addressing the negative consequence for inflation and the economy through a highly valued franc.”
“They are not aimed at giving Switzerland advantages by undervaluing the Swiss franc,” it added.