After rising to 1.0020 francs for one euro shortly before 5 p.m., the currency pair eased to trade half an hour later at 0.9995 EUR/CHF.
The franc returned to parity once morest the euro on Wednesday followingnoon, before falling back below this symbolic threshold, while the Swiss National Bank (SNB) seeks to strengthen the national currency to limit inflation in the country.
After rising to 1.0020 francs for one euro shortly before 5 p.m., the currency pair eased to trade half an hour later at 0.9995 EUR/CHF. The franc had no longer moved above parity at the beginning of July 2022.
For Arthur Jurus, strategist at the bank Oddo BHF, “the return of the EUR/CHF to parity is explained by the aggressive comments of the ECB concerning the tightening of their monetary policy”. According to the specialist, the European Central Bank “is behind on the tightening of its monetary policy and wishes to catch up in the face of galloping inflation”.
Isabel Schnabel, member of the ECB’s executive board, “is particularly very aggressive and would even like to tighten rates beyond what is necessary to quickly achieve the objective of medium-term price stability”, added Mr. Jurus.
The franc has appreciated significantly since last summer once morest the single European currency. Due to the global surge in inflation, the SNB had changed its tactics. To curb imported inflation, the issuing institution had said to let the franc appreciate to limit the impact of higher prices in Switzerland.
The SNB still active
At its previous monetary policy meeting on December 15, the SNB had indicated that it was “ready to be active in the foreign exchange market as needed to ensure appropriate monetary conditions”.
Its president Thomas Jordan then recalled that since the beginning of 2022, the price of the franc has appreciated by around 4% in value weighted by foreign trade. “This appreciation has made it possible to limit imported inflation and therefore to curb inflation in Switzerland,” he illustrated.
Returning to the currency sales, Mr Jordan said: “We have been doing that for the past few months, to ensure appropriate monetary conditions. We will also do so in the future when appropriate from a monetary policy perspective.”
But the leader had also hinted that the SNB remained willing “to buy currencies if excessive pressure on the appreciation of the franc was felt”.
