Currency strength is not a positive for the Swiss franc as the government continues to try and force the currency lower. Intervention has been in 2012 and there was a sell-off in May, but the CHF has again tried to move higher. The SNB has set a ceiling against the Euro of 1.2 CHF, but with a reprieve in the Greek crisis, there may be more room for a decline. The Euro is off its 22 month low but it is not clear that the fundamentals will allow for any sustained increase in value.
The macro fundamentals are not strong in Switzerland, but that this not the reason for currency strength. In fact, the currency has to be reduced to help the real economy outside banking. Real rates on the other hand show positive numbers especially with the current deflation. This is all driven by financial flows to protect against risk in the rest of Europe. Broad money has not shown excessive expansion, but the SNB has been willing to explode its balance sheet to place a ceiling on the currency.The foreign reserves of the SNB has increased by 70 CHF billion in the last month to 304 CHF billion
Right now, the SNB would like a less safe currency.
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