Swiss National Bank: Franc ‘Significantly Overvalued’

The Swiss National Bank (SNB) decided to keep its main interest rate at -0.75 percent on Thursday, saying that the Swiss franc was still “significantly overvalued.”

The bank adopted negative interest rates last December in a bid to deter investors from depositing their money in the country’s banks which in turn causes the Swiss franc to fall.

In its latest monetary policy assessment published on Thursday, the bank said: “Overall, the Swiss franc is still significantly overvalued, despite a slight depreciation.”

“The negative interest rates in Switzerland and the SNB’s willingness to intervene as required in the foreign exchange market make investments in Swiss francs less attractive; both of these factors serve to ease the pressure on the franc,” it said.

Earlier in September, the currency weakened past the psychologically important 1.10 level against the euro – the lowest level since the bank’ s surprise removal of the minimum exchange rate of 1.20 francs per euro at the beginning of the year, which caused the currency to soar 30 percent against the euro.

After the decision on Thursday, the Swiss franc was trading at 1.0954 against the single currency.

Some analyst believe the Swiss franc’s status as a safe-haven is gradually eroding, however, and analysts at Unicredit said recently that “there is plenty of room left for the Swiss franc to depreciate further.

The sharp rise in the currency and the pressure that put on Swiss exports, which were rendered more expensive, has put pressure on the economy, the Swiss government said on Thursday as it forecast “below-average” economic growth this year and next.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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