SNB Intervened to Halt Rush for Franc at Iran War Outbreak
(Bloomberg) — The Swiss National Bank sold francs in the first quarter, intervening to stop the currency’s surge when the US and Israel started to attack Iran.
Switzerland’s central bank purchased foreign exchange worth 3.9 billion francs ($4.8 billion) in the first three months of the year, it disclosed on Tuesday. Analysts at UBS Group AG reckon most of that occurred in March after the outbreak of the war.
The numbers reveal the extent that the SNB acted on what it declared early that month as its “increased willingness” to step in to currency markets and stave off haven inflows.
The last time the SNB sold the franc in any significant quantity was in 2025 following US President Donald Trump’s global “Liberation Day” tariff announcements in April. The volume of the interventions disclosed on Tuesday was lower.
From January until mid-March, the franc strengthened steadily against the euro, by as much as 3.5% compared to the beginning of the year. On March 9, it hit a decade-high of 0.8981 francs per euro. It then finished the first quarter with a pronounced drop, bringing the appreciation over the full three months to less than 1%.
After the first attacks on Iran, Swiss policymakers made the unusual step of releasing an unsolicited statement announcing that their readiness to intervene “to curb a rapid and excessive appreciation of the Swiss franc,” adding that this would jeopardize price stability.
Before the report, UBS economist Florian Germanier estimated sales of the currency in March to have totaled about 2.5 billion francs.
The central bank’s resolve to keep intervening has taken center stage in its communications. At their quarterly monetary decision this month, officials softened their language slightly, acknowledging weakened pressure on the franc by saying they have increased willingness to act “if necessary.”
The central bank only publishes data with a three-month delay, so the second-quarter tally showing whether the SNB continued its purchases won’t be revealed until September.
The franc is a key focus for SNB policymakers because its weigh on inflation via lower import costs. With interest rates at zero, officials have exhausted easing space, aside from the drastic and damaging option of reintroducing negative borrowing costs.
Consumer-price growth was just 0.6% in May, despite energy price spikes from the Iran war. June inflation data are due on Thursday, with economists predicting a deceleration to 0.5%.
By buying assets in foreign denominations, the central bank can weaken the exchange rate. Swiss officials used this mechanism for several years through 2022 to keep a lid on the franc. That swelled the SNB’s balance sheet to a size some observers deemed precarious.
Interventions have also previously drawn ire from Washington. During the last Trump administration, Switzerland was classified as a currency manipulator. That label was subsequently removed, but the country was last year put on a US watchlist again.
In a subsequent joint statement of Treasury, SNB and the Swiss government, the central bank vowed to not use interventions for economic advantage, while both sides acknowledged them as an appropriate tool to manage excessive currency moves.
SNB President Martin Schlegel has separately said that US pressure won’t stop the institution from steering the currency if required.
–With assistance from Kristian Siedenburg and Joel Rinneby.
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