SNB releases annual report - Swissquote

Yann Quelenn, market analyst at Swissquote Bank says in the latest annual report from the SNB, we have learned that the Swiss central bank bought around CHF67 billion in foreign currencies in order to defend the franc. Comparatively, this is lower than in 2015 when the floor was removed.

"The SNB still sees the franc as “significantly overvalued” and so the negative interest rate policy is more relevant than ever. However, for now, the central bank is sticking to its wait-and-see approach." 

"Europe's political uncertainties are weighing heavily on the EURCHF and we believe that bearish pressure shows no signs of easing. In terms of Swiss data, inflation has never been so high at 0.6% y/y and the unemployment rate remains moderate at 3.6%. Exports are a little more concerning with two consecutive declines in January and February (respectively -4% and -2.2%). In the short and medium-term, the Swiss Franc should remain below 1.0800 and the SNB is likely to intervene to avoid extreme strengthening. Finally, despite massive QEs, we believe that the ECB is likely to soon enter a tightening cycle – to reduce monetary policy divergence with the US - which in turn will definitely benefit the Swiss economy."