SNB continues to sell foreign currency at a slightly slower pace
Published: Friday, Dec 29th 2023, 09:51
Back to Live Feed
The Swiss National Bank (SNB) continued its foreign currency sales in the third quarter of 2023. It has slowed down the pace slightly. It last acquired foreign currency in the first quarter of 2022, but has sold it every quarter since then.
From July to September 2023, the central bank sold the equivalent of CHF 37.6 billion worth of foreign currency, according to SNB statistics published on Friday. In the second quarter, foreign currency sales amounted to 40.3 billion and in the first quarter to 32.2 billion.
Sales no longer in the foreground
The SNB reported the first foreign currency sales transactions in mid-2022. Before this time, it had bought foreign currency on a large scale in part to prevent the Swiss franc from appreciating too much. In 2021, for example, foreign currencies worth CHF 21.1 billion were purchased, and in 2020 the figure was just under CHF 110 billion.
Following a paradigm shift, the focus since 2022 has been on selling foreign currencies. The SNB used this instrument to combat inflation because selling foreign currency tends to lead to a stronger franc. This is because with an appreciating franc, less inflation is imported from abroad.
At the last monetary policy assessment in mid-December, the monetary authorities then declared that they would remain active on the foreign exchange market if necessary. "However, we are no longer prioritizing currency sales," said Thomas Jordan at the media conference on the monetary policy decision. The significant nominal and recent real appreciation of the Swiss franc had made further interventions superfluous.
Inflation within the target range
In fact, inflation in Switzerland fell surprisingly sharply in November. It fell to 1.4 percent after 1.7 percent in October. This is the lowest level since the end of 2021 and puts it within the range of 0 to 2 percent targeted by the Swiss National Bank (SNB).
The SNB itself adjusted its inflation forecasts in its assessment in mid-December: Inflation is likely to rise again to 2.0 percent in two quarters in 2024 due to higher electricity prices and rents and the increase in VAT. After that, however, it will decrease continuously and remain at 1.6% from the second quarter of 2025 until the third quarter of 2026. The full-year forecasts for 2024 and 2025 are therefore 1.9% and 1.6% respectively.
©Keystone/SDA
English 
German 
French 
Spanish 
Arabic