Thursday, July 14, 2011

UniCredit about Swiss National Bank intervention

Swiss franc keeps strengthening versus the single currency as investors regard it as a safe haven during the times of euro zone’s dent crisis and looming US debt. Analysts at Commerzbank claim that demand for franc will remain high as long as European and American debt problems remain unsolved. The pair EUR/CHF hit today the record minimum at 1.1492.

According to the Swiss National Bank’s Vice-Chairman Thomas Jordan, the central bank is concerned by such appreciation of the national currency and will be able to take the necessary steps in case deflationary risks reappear. SNB Chairman Philipp Hildebrand, however, noted that the central bank has no reason to take action at the moment as price stability was not threatened. Both of them declined to comment whether the SNB actually plans to intervene.

Earlier, during the period since March 2009 to June 2010 the SNB was conducting currency interventions before it posted the biggest annual $21-billion loss ever last year.

Analysts at UniCredit claim that even if the SNB tried to weaken the franc through renewed currency purchases it won’t achieve much as a lot of investors are using Switzerland as the only safe haven from the European crisis. In their view, the SNB can’t do anything because market forces are too powerful.  

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