SNBâs Frenzied Currency Battle May Give Way to Easier 2021
This content was published on December 16, 2020 - 05:00
December 16, 2020 - 05:00
(Bloomberg) Swiss National Bank President Thomas Jordan has reason to expect a less intense 2021 after a multi-billion currency battle this year that put Switzerland in the crosshairs of U.S. authorities.
The combination of a landmark European Union fiscal package and the anticipated global economic recovery driven by the rollout of Covid-19 vaccines will likely dampen demand for haven assets such as the Swiss franc, and a survey sees the currency weakening through 2021.
That should bring relief for Jordan ahead of the last scheduled policy decision of 2020 on Thursday. It means the SNB wonât have to dig as deep as it did this year to prevent the currency from appreciating, spending 90 billion francs ($102 billion) in the first half alone in an escalation of its seemingly endless currency fight.
Switzerland Will Meet U.S. Criteria for Currency Manipulation
Bloomberg 12/10/2020 Catherine Bosley and Saleha Mohsin
(Bloomberg) Switzerland’s foreign-exchange interventions to weaken the franc will be enough for the U.S. to qualify the country as a currency manipulator, though it has the option to hold back on the designation, according to people familiar with the matter.
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Switzerland is likely to meet all three criteria when the U.S. Treasury updates its report on the currency practices of trading partners, said the people, who declined to be identified because the document hasn’t yet been published.
While the manipulation label doesn’t lead to immediate sanctions, the risk for SNB President Thomas Jordan is that speculators start to question his resolve to intervene, prompting them to push the currency higher. Officials have said that being labeled a manipulator by the U.S. won’t stop them from intervening when needed.