Swiss National Bank Chair Jordan says Bank is making a "substantial commitment" to FX CHF intervention
SNB Chairman Thomas Jordan says of the Bank forex intervention: "we are active in the foreign exchange markets to reduce the pressure on the Swiss franc"
Jordan was speaking in an interview with the SonntagsZeitung newspaper.
- He cited stepped up intervention and staying the course on negative interest rates (the SNB apply a negative 0.75% rate to its deposit rate) due to what he described (correctly) as "enormous" upward pressure on the SWF
- "Due to crisis-driven inflows into franc-denominated assets, we're more active on foreign exchange markets to lessen pressure on the franc
- I want to stress that we're engaging substantially."
Jordan also spoke separately with the Tribune de Geneve paper; he was asked about defending the 1.05 level on EUR/CHF:
- "We do not defend a specific course against the euro. To carry out its mandate and in its assessment, the SNB takes into account the situation for all currencies"
Huh. You may be old enough to remember (it was only a few years ago) the SNB had specified 1.20 as a level it was defending. Until the day they threw in the towel defending that level for intervention and the cross plummeted, wiping out a lot of accounts, large and small.
History lesson (left side of the chart) and where we are at now (AKA the hard right edge):
You'll see ForexLive reporting on SNB 'sight deposits' each month, these are a proxy for gauging SNB intervention. Sight deposits are up nearly 77 bn Swiss francs so far in 2020. You'll see from the chart above the appreciation of the CHF the SNB is trying to counteract.
And, if you've read down this far, a parting shot from Jordan, what's ahead:
- "We still have room to manoeuvre if necessary, but today we are focusing on interventions on the foreign exchange market to limit the pressure on the franc."