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Swiss franc set to stay a laggard as SNB intervention risk rises

OCBC links the franc’s weakening safe-haven appeal to SNB’s readiness to intervene in FX markets, with CHF also pressured by low yields relative to rising global rates.

Reported · Written up by our desk · Major Pairs

OCBC Bank strategists Sim Moh Siong and Christopher Wong said the Swiss franc has lost much of its traditional safe-haven appeal, with Swiss National Bank intervention risk and low yield conditions weighing on performance.

They pointed to SNB messaging from its 18 June policy meeting, where the central bank said monetary conditions remain appropriate and that it saw no immediate need for further action even as upside inflation risks have increased.

Since the outbreak of the US-Iran conflict, OCBC said the SNB’s increased willingness to intervene, if necessary, has further curbed CHF safe-haven demand, leaving the franc driven more by interest rate dynamics than by risk aversion.

With Swiss inflation below the midpoint of the SNB’s target range and policy rates expected to stay at zero while global yields rise, OCBC expects CHF to remain among the G10 FX laggards.

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