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Investing.com --The release of the Swiss National Bank’s (SNB) balance sheet data revealed significant foreign exchange interventions, according to UBS. The Swiss franc has experienced notable appreciation, prompting the central bank to engage in FX purchases to counteract this strength.
The SNB’s next policy meeting is not until June 19, a date set well before the recent currency movements triggered by US tariff announcements and market volatility in April.
The SNB has consistently communicated its readiness to utilize FX interventions as a policy tool. The Swiss franc’s value has increased by 7% against the US dollar, 2% against the euro, and 3% in trade-weighted terms.
UBS’s analysis suggests that the currency’s appreciation could potentially reduce inflation by 0.3 percentage points over the forthcoming two quarters. This poses a significant challenge for the SNB, especially considering the already low inflation rates recorded at 0.3% in March and 0.0% in April. The inflation data for May, released on June 3, further underscored the risk of deflation.
The SNB’s April balance sheet data, made public today, indicates that the central bank intervened in the FX markets to a substantial degree. UBS estimates that the SNB’s FX purchases in April amounted to approximately CHF 5 billion, marking the largest monthly FX purchase since the end of 2021.
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