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Swiss Franc Gains Despite SNB Keeping Negative Interest Rates

March 21, 2019 at 17:22 by Vladimir Vyun

Swiss coins on franc notesThe Swiss franc rallied against most major currencies today, with the exception of the US dollar, which was rebounding after yesterday’s losses. Markets largely ignored the monetary policy meeting of the Swiss National Bank.

As was expected, the SNB kept its interest rates in the negative territory, with interest on sight deposits staying at –0.75% and the target range for the three-month Libor at between –1.25% and –0.25%. While the central bank admitted that “the Swiss franc has depreciated slightly on a trade-weighted basis” since the previous monetary policy assessment in December, Swiss policy makers continued to think that the currency “is still highly valued.” As a result, the statement said:

The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.

The central bank downgraded its inflation forecasts, to 0.3% from 0.5% for this year and to 0.6% from 1.0% for 2020. For 2021, the inflation outlook was at 1.2%. The growth outlook for 2019 remained stable at 1.5%.

USD/CHF rallied from 0.9910 to 0.9939 as of 17:07 GMT today, though the bounce was not nearly enough to bring the currency to yesterday’s open of 0.9993. At the same time, EUR/CHF dropped from 1.1321 to 1.1282, and its daily low of 1.1265 was the lowest since January 25. NZD/CHF declined from 0.6855 to 0.6826.

If you have any questions, comments, or opinions regarding the Swiss Franc, feel free to post them using the commentary form below.

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