Fundamental Comment

Swiss franc remains firm after SNB rate decision

Swiss franc remains firm after SNB rate decision

The Swiss franc strengthened versus major currencies after the Swiss National Bank (SNB) opted to maintain its current monetary policy, where it has remained firm amid haven demand.

The SNB stated that the deposits would continue to face interest charges of 0.75% and that its policy would remain as before "expansionary."

The central bank reiterated that the franc “is still highly valued” and the “willingness to intervene in the foreign exchange market.”

The bank raised its inflation forecasts to 0.6 percent in 2019, up from 0.3 percent, given the surge in the prices of imported goods. Yet, inflationary pressure is likely to remain moderate.

GDP grew by 2.3 percent in the first quarter, where the SNB continues to expect the economy to grow by around 1.5 percent in 2019, according to the SNB statement.

Earlier today, the franc took advantage of the worries from the protest in Hong Kong and lack of confidence in ability of the United States and China to reach a trade deal any time soon.

However, with the rebound in European shares, especially after the boost from oil prices, the franc lost some of its appeal as a safe haven currency.

Meanwhile, the franc traded higher versus the euro to grad the EURCHF pair down to 1.1205, compared to the session’s open at 1.1234.

Against the U.S. dollar, the franc also strengthened to 0.9923, where the pair is on course for its first daily gain in four sessions.

Other safe havens such as the Japanese yen and gold remained firm, but surrendered some of earlier gains as European shares rebounded.

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