Free Trial
USDCAD TECHS

Remains Vulnerable

AUDUSD TECHS

Northbound

US TSYS

Late SOFR/Eurodollar/Treasury Option Roundup

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

MNI INTERVIEW2: Low SNB Rate Peak To Prompt FX Intervention

(MNI) LONDON

The Swiss National Bank is likely to hike by another 75 basis points in December following September’s increase by the same amount, but while it is keeping pace with other central banks for the moment, it will stop tightening at a lower level of rates while possibly intervening to shore up the franc, Swiss-based economist Charles Wyplosz told MNI.

The SNB’s benchmark rate could rise from 0.5% to somewhere closer to 2.2-2.5%, said Wyplosz, professor emeritus at the Graduate Institute, Geneva, anticipating that the resulting capital outflow as investors seek higher rates in euros and dollars could prompt intervention. (See MNI INTERVIEW: SNB Could Be Forced Into Intra-Meeting Hike)

“The SNB will probably not want to rekindle inflation, so they will have to intervene to appreciate the exchange rate,” he said in an interview. “They have never done QE and they don't do QT, but they might be led to do their version of QT and shrink their balance sheet, which is currently enormous.”

Having indicated in June and September’s monetary policy assessments its willingness to intervene in both directions, the SNB will not have a target level for the exchange rate in mind, Wyplosz said.

“Ideally, if they have, say, 5% less real appreciation per year relative to the others [currencies], they could appreciate the nominal exchange rate by 5%. That’s the rule of thumb that I expect them to use.”

MNI Frankfurt Bureau | +49-69-720-146 | luke.heighton@marketnews.com
MNI Frankfurt Bureau | +49-69-720-146 | luke.heighton@marketnews.com

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.