In recent trading, the Swiss franc saw a modest downturn, moving away from its peak value of 0.89 against the USD, which it had reached on October 23rd. Now, it trades at 0.9 per USD. This shift comes as the situation in the Middle East hasn’t escalated intensely, which lessened the appeal of the franc, traditionally seen as a refuge during geopolitical tensions.
Monetary Policies Influence Currency Dynamics
Furthermore, the monetary policies of the Swiss National Bank (SNB) and the Federal Reserve have also played a role in the Swiss currency’s recent performance. The SNB surprised markets by maintaining its key policy rate in September, focusing on nurturing economic growth amidst modest inflation pressures. September’s inflation in Switzerland climbed to 1.7%, a rate that’s on the lower end globally, with the core inflation rate declining to an 18-month low of 1.3%.
The Franc’s Yearly Outlook
Despite these pressures, the franc has maintained a 1.5% increase against the dollar since the beginning of the year. This is partly due to the SNB’s significant interventions, which have brought its foreign exchange reserves to the smallest amount since 2017. On the other hand, robust economic indicators from the US hint that the Federal Reserve may continue its tight monetary policy.