Swiss National Bank sold US$45 billion of forex in Q3
THE Swiss National Bank (SNB) sold foreign currency worth US$44.73 billion in the third quarter, the central bank said on Friday (Dec 29), as its recent efforts to boost the Swiss franc to curb imported inflation neared the end.
The second largest amount of forex sales since the SNB started publishing its data on its transactions in 2020, it is likely to be the last big sell-off for some time, after Swiss inflation returned to the SNB’s 0-2 per cent target range, falling to 1.4 per cent in November.
Chairman Thomas Jordan told reporters in December at the SNB’s most recent monetary policy assessment the bank was no longer focusing on foreign currency sales.
The sale in the three months to the end of September was a decrease from the record 40.3 billion francs’ (S$63.2 billion) worth of dollars, euros and other currencies the bank sold in the second quarter.
The Swiss franc has continued to rise in value against the dollar and the euro, hitting 0.93525 versus the common currency earlier this week – its highest valuation since January 2015 in anticipation of interest rate cuts by the European Central Bank.
The SNB had focused on buying foreign currency – to slow the rapid strengthening of the safe-haven franc – until switching to forex sales in the second quarter of 2022.
UBS economist Maxime Botteron, who expects lower sales in the last three months of 2023 and much less activity at the start of 2024, said the ebbing of Swiss inflation and rise of the franc has lessened the need for SNB forex sales.
“Assuming inflation does not accelerate more than what is already anticipated for Q1 2024, I think we will not see much FX interventions in the Q1 2024 data,” Botteron said. REUTERS
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