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The Swiss National Bank retains the ability to wage currency market interventions if necessary, according to one of its officials.
“The balance sheet is the result of our monetary policy,” Martin Schlegel, one of the SNB’s alternate governing board members, said on Wednesday at an event in Bern. “That means that if we need to loosen monetary policy we still have the room to expand the balance sheet.”
Schlegel’s comments come as investors once again train their eyes on Switzerland, which has spent the past decade battling inflows into its haven currency.
They may want to test the SNB’s willingness to intervene to temper franc gains after the U.S. added Switzerland back onto its currency manipulator watchlist.
The move drove a rally in the franc, sending it to its strongest in nearly three years against the euro.
The recent uptick in investors’ interest comes almost exactly five years after the SNB shook global markets by scrapping its ceiling on the franc and introducing the world’s lowest interest rate.
Schlegel said there is no alternative to the SNB’s negative interest rate, currently at minus 0.75%.
Interventions are part of the SNB’s regular toolkit, though officials are rarely willing to discuss them. In response to the U.S. announcement this week, the government responded that it doesn’t manipulate the franc to give the country a competitive edge.
Data suggest the SNB was in the market last August. So-called sight deposit figures due on Monday will shed light onto any interventions this week.
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