The Swiss National Bank (SNB) is likely to intervene in the foreign exchange market again last week to weaken Frank.
And with more volume.
The SNB This is indicated by the sight deposits, which are considered to be indicative of such interventions and have increased significantly in the past week. Deposits by the federal government and banks totaled CHF 585.5 billion on August 9, as announced by the SNB on Monday. That's an increase of about 2.8 billion compared to the previous week.
Already in two weeks the sight deposits increased by 1.5 and 1.7 billion, then it gave no major changes for long.
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Long-lasting strong growth
Demand deposits last week were as strong as they were in strength for more than two years, not now, it is in the VP Bank's comments. For them, it is clear that central bankers have increased the amount of intervention.
The development over a four-week period shows that the volume was gradually increased. "SNB's pain threshold thus reaches current exchange rate quotes," concludes the report.
Frank has become remarkably strong lately. Last week, the euro dropped below 1.09 for the first time in two years. Currently, the price is 1.0879 below this threshold.
The strength of the Swiss franc is explained by the businessmen with trade conflicts, the unresolved Brexit question, and the government crisis in Italy. In this environment, investors searched for "safe havens" like the Swiss franc. UP European Central Bank (ECB) will not forget to announce that V.P. According to the bank, it intends to launch a large package of monetary policy measures in September.
Interest rate decline after ECB?
Bank economists believe that foreign exchange intervention is the SNB's preferred tool. If there is widespread euro weakness following the September meeting of the ECB, the rate reduction cannot be ruled out.
The SNBA had to intervene extensively, especially in the years 2015 to 2017. On January 15, 2015, Swiss franc put a huge rock on the January 15, 2015, after the National Bank raised the euro-zone exchange rate, causing huge trouble for the Swiss export industry.
In the foreign exchange market intervention, the central bank buys foreign currency and deposits the corresponding amount of Swiss francs to the banks on their SNB accounts.
RW / uh
Source: Keystone, Fabrice Coffrani / AFP / Getty Images, Swiss National Bank