SNB Details Size of Intervention

According to Reports the Swiss National Bank has confirmed it has spent $32 billion to weaken the Swiss franc since March. How effective has it been? The trade-weighted index (BOE calculation CEERSZ on bloomberg) has effectively depreciated by about 3.2% from its peak on March 6th to today. Against the euro, the Swiss franc has fallen about 4.3%. Given the openness of the Swiss economy (exports+imports as % of GDP) this currency move is not tantamount to much easing of monetary conditions.

Recall the Swiss intervention is part of their unique quantitative easing. Whereas the U.S., Japan and the UK bought their own bonds, the SNB says its bond market is too small so it has to buy foreign bonds and to do so, of course, requires, buying foreign currencies.

SNB's Jordan said earlier today that the intervention has been effective. But he did not provide a metric. And it is difficult to measure the counter-factual--where would the franc be if it were not for the intervention.

We have recommended not fighting the SNB during most of the period since March and most recently recommended buying euros for francs. Earlier today the euro traded at its best level of the month against the Swiss franc. Yet the best level the SNB was able to achieve was on the initial shock factor of one of the world's largest current account surplus countries intervening against its own currency. The euro reached a high of CHF1.5447 on March 16th and has not traded above CHF1.54 March 19th.