A more modest theme in the FX market has been the strength of the Swiss franc against the euro (~3% since mid-Dec). Recall the quantitative easing strategy the SNB pursued included blocking CHF appreciation through intervention and the purchase of foreign (dollar and euro) bonds. The franc has appreciated through the top end of the range the SNB was perceived to be defending. Indeed, today the franc is trading at its best level against the euro since the first intervention back in March 2009.
Earlier today the SNB published its foreign currency holdings and both dollars and euro holdings increased, suggested QE has continued. Specifically, the SNB's euro holdings rose 5.3 bln euros to 37 bln and the dollar holdings rose by $7 bln to $27.6 bln. While it is possible that the intervention was concentrated in the earlier part of Q4, it is also possible that the demand for Swiss francs, ostensibly coming from eastern and central Europe, where mortgages and other loans were taken out in francs and from the Swiss themselves who may be selling foreign assets to bolster domestic positions. Little in the way of the euro to return toward last year's low near CHF1.46, without a stronger protest from Swiss officials.
Earlier today the SNB published its foreign currency holdings and both dollars and euro holdings increased, suggested QE has continued. Specifically, the SNB's euro holdings rose 5.3 bln euros to 37 bln and the dollar holdings rose by $7 bln to $27.6 bln. While it is possible that the intervention was concentrated in the earlier part of Q4, it is also possible that the demand for Swiss francs, ostensibly coming from eastern and central Europe, where mortgages and other loans were taken out in francs and from the Swiss themselves who may be selling foreign assets to bolster domestic positions. Little in the way of the euro to return toward last year's low near CHF1.46, without a stronger protest from Swiss officials.
Swiss Intervention
![Swiss Intervention]()
Reviewed by magonomics
on
January 21, 2010
Rating:
