ZURICH, June 30 (Reuters) - The Swiss National Bank spent just 296 million Swiss francs ($321 million) on foreign currencies during the first three months of 2021, the bank said on Wednesday, massively scaling back its market interventions as the global economy recovers.
In contrast, the SNB spent 8.69 billion francs during the fourth quarter of 2020 and bought foreign currencies worth nearly 110 billion francs during the year as a whole to weaken the franc, whose strength is a problem for Swiss exporters.
The SNB was reacting to weaker demand for safe-haven investments like the franc as the global economy picked up from the global pandemic at the start of the year, analysts said.
Still, the SNB said it remained committed to using foreign exchange interventions as one of its tools to stem the franc's rise, governing board member Andrea Maechler said this week. read more
"We continue to have ... our willingness to intervene as needed on the exchange rate in order to push back any excessive pressure on the Swiss franc," Maechler said on Monday. read more
Maechler this week said the franc remained particularly highly valued against the euro compared to the U.S. dollar. Since the start of 2020, the franc has depreciated 1.5% versus the bloc's single currency and 4.2% versus the dollar.
Analysts expect the SNB's interventions to wane, particularly as the Eurozone recovers, supporting the euro against the franc.
"We don’t expect any meaningful interventions in the coming 12 months on the back of our FX forecast of EURCHF at 1.10 in June 2022," said UBS economist Alessandro Bee.
J.Safra Sarasin economist Karsten Junius said: "Compared to 2020 the Swiss economy improved its price competitiveness such that a stronger CHF than last year would be fundamentally justified from a purchasing power perspective."
Junius added that his institution expected low levels of intervention in the second and third quarter, and a stable exchange rate, while the franc was expected to appreciate in the medium term.
($1 = 0.9210 Swiss francs)
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