Rates & Bonds

SNB following franc developments closely, stands ready to intervene - Maechler

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ZURICH, Nov 27 (Reuters) - The Swiss National Bank (SNB) is following the Swiss franc's exchange rate "very closely" to monitor its impact on the economy and remains ready to intervene when necessary, governing board Member Andrea Maechler told broadcaster RTS.

"At the SNB, we're always ready to intervene in foreign exchange markets if needed," Maechler said during the interview with RTS' TV programme Forum. "We don't target a specific exchange rate, neither a specific level nor a specific rate versus the euro or the dollar, but we follow it very closely to see the impact on the economy."

The Swiss franc hit its highest level against the euro in six years on Friday, without signs of the currency interventions the SNB has often undertaken at such moments in the past.

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Maechler said it was difficult for the economy to deal with sudden changes in the exchange rate, while gradual adjustments were easier to handle.

"An exchange rate is a value versus a foreign currency so it also depends on the inflation we have here in Switzerland versus the inflation abroad," she said.

The SNB saw inflationary pressure in the current environment, she said, but it remained to be seen whether this was just temporary.

"Inflation signals that the economy is on the path towards recovery. From that point of view, we see it with great optimism," she said. "The question is how fast it goes up and currently we see a certain inflationary pressure. The question is whether this is temporary or the beginning of a big upwards movement."

It was not the central bank's role to react to "each and every shock", she said, but rather to maintain inflation within the SNB's 0% to 2% target range over a mid-term horizon of two to three years.

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Reporting by Silke Koltrowitz; writing by Brenna Hughes Neghaiwi; editing by Nick Macfie

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