Back
15 Jan 2015
Swiss deflationary risks have increased- Rabobank
FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank explained that the press release that accompanied today’s move from the SNB makes the point that the euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar.
Key Quotes:
"In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified."
"While there is sense in the central bank maintaining an optimistic spin to provide some support to inflation expectations, it is difficult to accept that the SNB wasn’t forced into today’s decision."
"Switzerland’s effective exchange rate has continued to push higher since the middle of last year in reflection of the downward pressure on EUR/CHF."
"Even assuming that the SNB may have to intervene some more to help EUR/CHF stabilise, the deflationary risks facing Switzerland appear to have increased."
"In an environment in which low interest rates are no longer proving an effective tool to counter deflation, the failure of the SNB’s floor should be lamented by policy-makers who appear to be increasing running out of policy tools."
Key Quotes:
"In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified."
"While there is sense in the central bank maintaining an optimistic spin to provide some support to inflation expectations, it is difficult to accept that the SNB wasn’t forced into today’s decision."
"Switzerland’s effective exchange rate has continued to push higher since the middle of last year in reflection of the downward pressure on EUR/CHF."
"Even assuming that the SNB may have to intervene some more to help EUR/CHF stabilise, the deflationary risks facing Switzerland appear to have increased."
"In an environment in which low interest rates are no longer proving an effective tool to counter deflation, the failure of the SNB’s floor should be lamented by policy-makers who appear to be increasing running out of policy tools."