Swiss Franc: Still a low-yield funding currency – OCBC
OCBC strategists Sim Moh Siong and Christopher Wong note that the Swiss National Bank (SNB) kept rates at 0% and toned down its FX intervention language, signalling more tolerance for a firmer Swiss Franc but not a hawkish shift.
OCBC analysts Sim Moh Siong and Christopher Wong have observed that the Swiss National Bank (SNB) maintained its policy rate at 0% and softened its foreign exchange intervention language, signaling a more accommodating stance towards a stronger Swiss Franc (CHF). Despite this, OCBC still perceives the CHF primarily as a funding currency in the near future due to factors such as stable inflation and unchanged policy rates.
The SNB's language change suggests a greater tolerance for a stable or stronger CHF, which could help mitigate inflation risks caused by higher energy prices. Inflation is expected to remain within the SNB's 0-2% range, with an average of 0.8% projected for 2027 and 2028, assuming policy rates stay at 0%. OCBC does not anticipate the SNB to adopt a more hawkish approach, as current inflation levels are within the central bank's target range.
While risks to CHF funding do exist, such as a sudden increase in gold prices or a negative European growth outlook, these risks do not appear imminent. Consequently, the CHF is likely to continue serving as a low-yield funding currency in the coming months.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
- Dollar hovers near 2-month peak, Swiss Franc falls, Norwegian crown rises channelnewsasia.com
