Situation in Switzerland will be of greater significance for the FX market – Commerzbank

The Swiss central bankers once again changed their intervention strategy. In the opinion of economists at Commerzbank, the situation in Switzerland will be of greater significance for the FX market.

The Franc will become a currency that is more complex to value

“Interventions in favour of the Franc would no longer be caused by CHF depreciation. There will only be interventions in favour of the Franc if the SNB considers it necessary from a monetary policy point of view.”

“We now have to figure out whether the SNB’s monetary policy strategy is working out, in particular whether inflation develops as the central bankers had hoped. And if that is not the case, we have to form an opinion as to whether the SNB will prefer to ‘only’ hike interest rates or whether it might prefer to intervene or do both.”

“One thing is clear: the times when Swiss inflation data was almost irrelevant for the CHF exchange rates are likely to be well and truly over. The Franc will become a currency that is more complex to value.”

“Just to ensure that there are no misunderstandings: interest rate policy remains the most important monetary policy tool. But at least the SNB took a first step towards exchange rate policy. That is quite wise for a small, open economy. It sounds quite sensible that in the future the situation in Switzerland will be of greater significance for the FX market.”