Yesterday SNB’s Zurbruegg said that it is important for the SNB to keep lower interest rates than others to avoid the CHF appreciating excessively. Zurbruegg added that the SNB will keep the ability to intervene in FX if needed to ensure prices stability.

SNB intervention

When the SNB intervenes to weaken the CHF it does so by buying large amounts of euros and dollars. You can see the latest sight deposit data as it is released to gauge whether the SNB is intervening in markets. The data is released weekly by the SNB. However, the SNB had surprised markets in why it did not intervene in markets even when the CHF has shown serious strength lately and is approaching 2015’s lows now.

In last December’s press conference SNB’s Maechler said that the Swiss franc appreciation had not been so much in ‘real terms’. The SNB, therefore, is looking most closely at the real exchange rate (REER) rather than the nominal exchange rate. This means that the rising inflation says in the US impacts what the SNB will consider as ‘highly valued’ in terms of nominal rates. You can read about real exchange rates here from the IMF. See here for another explainer.

Four actionable points here for trading the CHF:

  • Don’t just buy the EURCHF at market prices because it looks very ‘cheap’.
  • Don’t bet on SNB intervention to prop up prices as they are looking at the real exchange rate (not just the nominal).
  • With inflation very high in the US the SNB may be happier than you might think with a seemingly very strong CHF. EURCHF could fall to 0.90 in a high inflation scenario. See George Dorgan’s insightful piece here at the
  • Watch the SNB rate decisions and press conferences for hints on their likely course of action in intervention. The next meeting is on March 24.