The SNB managed to reduce pressure on franc

The Swiss National Bank (SNB) reduced on September 16 its 3-year inflation outlook. This news eased the pressure on the Switzerland’s currency and helped franc lose 2.3% versus euro. Inflation rate expected in 2011 was diminished from 1% according to June estimate to 0.3% and in 2012 – from 2.2% to 1.2%. The pace of inflation won’t exceed the limit set by the central bank at 2% at least until the second half of 2013 года that’s a year later than anticipated before.
An analyst of the FBS brokerage company Elizabeth Belugina notes that the revision played the role of the verbal intervention. As a result, it’s possible to assume that inflation forecasts of the country central bank may be a much more
effective way to control franc’s rate than the currency interventions that were previously used by Swiss monetary authorities. SNB’s foreign-currency reserves quadrupled in the 15 months to June, causing $15 billion loss in the first half of 2010.

Even though franc didn’t stop climbing versus the greenback, the decline of its exchange rate against the single currency is more important as 55% of Swiss exports go to the euro zone and only 10% to the United States.

In addition, it’s necessary to note that after the release of the new forecast many major banks changed their forecasts for SNB’s interest rates hike. Goldman Sachs postponed potential rate increase to from March 2011 to June, Credit Suisse Group AG – from December to June, while UBS from December to March.

You are free to discuss this article in Merket Leader
You are free to discuss this article here:   forum for traders and investors