MUFG’s Senior Currency Analyst Lee Hardman notes the Swiss Franc has failed to benefit from safe-haven demand, as the Swiss National Bank signalled a greater willingness to intervene in FX markets. The SNB’s statement lifted EUR/CHF back above 0.9100 after a 0.9025 low. Markets still see only a small probability of negative rates returning ahead of the 19 March policy meeting.

SNB verbal intervention supports EUR/CHF

"Even the Swiss franc which normally benefits from a pick-up in safe haven demand triggered by geopolitical and global inflation risks has weakened."

"The Swiss franc attempted to strengthen initially yesterday but quickly gave back those gains after the SNB sent a strong signal that they were moving closer to intervening in the foreign exchange market to dampen currency strength."

"The SNB stated that “in view of international developments, we are increasingly prepared to intervene in the foreign exchange market.""

"We are ready to intervene in the foreign exchange market to curb a rapid and excessive appreciation of the Swiss franc, which would jeopardize price stability in Switzerland”."

"The statement helped to lift EUR/CHF back above the 0.9100-level after it hit a low yesterday at 0.9025."

"The verbal intervention from the SNB indicates as well that they would prefer to intervene if necessary to dampen currency strengthen rather than lower rates back into negative territory."

"The Swiss rate market is still pricing in only a small probability of a return to negative rates ahead of the SNB’s upcoming policy meeting on 19th March."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)