SNB says exporters must cope with franc’s rate
The Swiss National Bank has signalled again that it is unwilling to take action to weaken the franc against the euro to help Swiss exporters.
In a speech to the Swiss Bankers’ Club on Monday, SNB board member, Niklaus Blattner said the bank could in theory try to weaken the franc by cutting interest rates further. But he noted that cuts by the US Federal Reserve had caused the dollar to rise rather than go down and said an increase in the money supply would increase the risk of inflation.
“The hopes that a lower Swiss franc exchange rate will boost export chances are understandable but at the same time illusory,” said Blattner. “Exports are more dependent on economic cycles than on the exchange rate.”
Trading rate
The franc is currently trading at around SFr1.476 against the euro, which is below its historic high of 1.4391 reached on September 21 but above the SFr1.50 to SFr1.53 range in the twelve months prior to the attacks on the United States.
Swiss exporters have repeatedly complained about the franc’s strength against the euro.
Despite Blattner’s comments, some economists are expecting another interest rate cut at the bank’s quarterly policy review on March 21. But others say the prospect of an economic recovery in the middle of the year has lessened the probability of more cuts.
The SNB last cut its key interest rate by half a per cent in December, bringing its LIBOR target to 1.25-to-2.25 per cent.
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