Franc Drops as CPI Falls, SNB Ready to Intervene Again
The Swiss franc weakened today after the report showed that the inflation in Switzerland unexpectedly declined, spurring the speculation that the central bank may tighten the peg of the Swiss currency to the euro.
The Federal Statistical Office reported that the Swiss Consumer Price Index fell by 0.1 percent in October, following the 0.3 percent growth in the preceding month. Analysts promised the index to increase by 0.2 percent. The members of the Swiss National Bank were already worried about the negative impact of the strong currency on the nation’s economy and the slowing inflation gives even more stimulus for an additional intervention. SNB President Philipp Hildebrand commented on the strength of the franc inn his interview to the NZZ am Sonntag newspaper:
It could lead to deflationary developments and weigh heavily on the economy. We are ready to take further measures in case economic prospects and a deflationary development should require it.
USD/CHF advanced from 0.8870 to 0.8960 and EUR/CHF rose from 1.2267 to 1.2335 today as of 11:12 GMT.
If you have any questions, comments or opinions regarding the Swiss Franc, feel free to post them using the commentary form below.
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EUR/CHF, Federal Statistical Office, Franc, Inflation, Philipp Hildebrand, Swiss National Bank, Switzerland, USD/CHF
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Earlier News About the Swiss Franc:
- Swiss Franc Lower as Foreign Currency Reserves Decline (2011-11-05)
- Franc Down as Swiss Economy Loses Momentum (2011-11-02)
- Franc Gains vs. Dollar, Retreats vs. Yen (2011-10-29)
- Franc Continues to Profit from Troubles in Europe (2011-10-22)
- Franc Finds Strength in Fears of European Crisis (2011-10-20)
2 Comments
What is the significance of this recent intervention of the SNB to reduce the value of the Swiss Franc against the other major currencies? I recently exchanged US Dollars for Swiss Francs as a hedge against inflation of the dollar.
Thanks for enlightening me further in this situation.
John Bohlen
This intervention confirmed the SNB’s commitment to keep franc weak against the euro. It’s not a very good hedge against the USD inflation. I’d be shorting treasuries instead.