FX Irony in Switzerland

Since 6 February, monetary policy data from the Swiss National Bank (SNB) has suggested the Bank has not been intervening in the currency. This was corroborated by the official SNB Reserves last week. 

The headline increase in FX reserves was accounted for by the currency valuation effect. Valuation-adjusted, FX reserves were unchanged. 

Mounting evidence that the SNB is not intervening contrasts with ongoing Swiss franc (CHF) depreciation. 

Standard Chartered notes that the CHF depreciation is the result of investment flows.

• Negative interest rates and a sudden currency appreciation have created the perfect environment to make Swiss assets and the CHF unattractive. 
• Ironically, the SNB may finally have achieved a weaker currency by abandoning its interventionist policies.