SNB Chairman: “We Won’t Engage on Currency Manipulation”

SNBThe Swiss National Bank chairman Thomas Jordan said during an interview with Bloomberg TV that the bank doesn’t engage in currency manipulation through foreign currency purchases.

“We do not manipulate the currency, but we have to intervene to steer monetary conditions in Switzerland,” he told Bloomberg TV during the Davos Economic Forum annual meeting, “We never intend to weaken the Swiss franc to get an advantage over other countries,” he added.

The Swiss Franc is considered a “safe haven asset”, so investors tend to run towards it when the economic sentiment worsens, this makes the Swiss Franc highly susceptible to overvaluation, which makes swiss exports costly affecting the swiss economic activity. In order to face this problem, the Swiss national bank has pegged the Swiss franc in the past.

The United States recently added the Swiss Franc to its “manipulation watchlist”, based on claims that were immediately rejected by the Swiss government.

“It should be stressed that Switzerland does not in any way engage in manipulation of its currency to prevent adjustments to the balance of payments or gain unjustified competitive advantage,” stated the swiss finance ministry after the US Treasury claimed that the Swiss foreign exchange purchases increased since the currency has appreciated both against the US dollar and the Euro. The US also included countries like Japan, Germany, and South Korea.

Jordan explained that since the swiss currency is highly valued, that has pushed the central bank to keep its current expansive monetary policy, leaving the cash rates in negative territory at -0.75 percent, as well as implementing currency interventions when needed.

The US dollar has gained territory against the Swiss Franc today, rising 0.09 percent by 11:16 GMT, hitting the 0.9686 level. On the other hand, the Pound Sterling lost 0.03 percent against it, hitting the 1.2712 level.

The Swiss National Bank is expected to release its next interest rate decision in March.

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