Sight deposits at the Swiss National Bank increased only marginally last week, suggesting President Thomas Jordan and his colleagues aren’t taking much action to counter the strengthening franc.
Iran-U.S. tensions and fears about the spreading Coronavirus has lifted the haven franc this year. Earlier on Monday, it breached the 1.07 per euro mark to touch a fresh three-year high.
Yet the amount of cash commercial banks hold with the central bank — seen as a early indicator of activity — rose just 0.22% to 587 billion francs ($605 billion) in the week ending Jan. 24.
While there’s been no evidence of interventions recently, the threat of action remains alive. SNB President Thomas Jordan told Bloomberg Television on Thursday that the pledge to sell the franc if needed remains in place alongside the central bank’s record-low interest rates.
Last week, euro-area officials expressed optimism over signs of economic stabilization, citing easing global trade tensions and a mildly expansionary fiscal policy. UBS Group AG reversed its call for an SNB rate cut in March.
“The SNB is tolerating a bit stronger franc, maybe also because the economic environment is looking a bit better,” Credit Suisse Group AG economist Maxime Botteron said.
Video: SNB Isn’t Weighing a New Franc Cap
Responding to a U.S. decision to add Switzerland back on its watch list for currency manipulators, Jordan said the SNB was only looking to stave off deflationary conditions with its purchases of foreign currency.
“U.S. pressure on Switzerland not to intervene to hold the currency down has given franc bulls another reason to be long,” according to Kit Juckes, a currency strategist at Societe Generale.