The Swiss National Bank bought foreign currencies worth 281 million Swiss francs ($312.47 million) in the first quarter of 2024, it said on Friday, reversing its recent foreign exchange sales policy to strengthen the franc.
The amount of dollars, yen and euros purchased contrasts sharply with the 22.7 billion Swiss francs worth of foreign currency sold by the SNB between October and December.
The SNB declined to comment on Friday on the change in its approach.
In recent quarters, the central bank has sold foreign currencies to support the franc and reduce the effect of inflation from more expensive imports.
However, inflation has been within the 0-2% range set by the SNB for several months, while the safe-haven franc has risen sharply against the euro on concerns about the upcoming French elections.
SNB President Thomas Jordan said earlier this month that the SNB was prepared to intervene in currency markets to prevent a rapid rise or fall of the franc.
Alessandro Bee, an analyst at UBS, described the foreign currency purchases as modest and not a sign that the SNB would intervene massively against the franc, at least at current exchange rates.
“The SNB bought virtually nothing in the first quarter, while it sold billions of dollars in previous quarters,” said Mr Bee, who expects the franc to reach 0.92 against the euro over the next 12 months.
“This is not a level that worries the SNB too much, but if the franc rises to 0.90 against the euro, it could start selling francs again significantly in an attempt to weaken the currency.”
Karsten Junius, chief economist at J. Safra Sarasin, said the foreign currency purchases confirmed the SNB’s previous message that it had stopped foreign currency sales, but the amount of foreign currency purchased was too small to draw any conclusions.
“I wouldn’t expect her to be active in the foreign exchange market right now either,” he added.
(1 dollar = 0.8993 Swiss francs)
