EUR/CHF to slide towards 0.96 into Q4 – Scotiabank
|In the opinion of economists at Scotiabank, the Swiss franc (CHF) is poised to stay relatively firm, particularly as the Swiss National Bank (SNB) may tolerate a stronger exchange rate to combat sticky domestic inflation.
Persistent CHF strength on sticky inflation
“The SNB’s June decision to raise interest rates and allow the CHF to appreciate reflects the central bank’s concern that inflationary pressures, while low by international standards, are proving harder than expected to control.”
“An ‘active’ approach to CHF management now allows the SNB to support the CHF if it weakens too far as well as curb strength.”
“The SNB policy rate is likely to rise a little more in the coming weeks and we look for the CHF to strengthen modestly against the EUR to 0.96 into Q4 as policy makers leverage the exchange rate to curb domestic prices.”
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