class=”sc-29f61514-0 icZBHN”>
The franc fell 0.1 percent against the euro on Wednesday to 96.91 centimeters. The last time the Swiss currency was this weak against the European single currency was July 11. Against the dollar, the franc decreased by 0.2 percent to 91.78 centimeters; This level was last reached at the end of March.
The weakening of the franc is a result of the interest rate decision taken by the Swiss National Bank (SNB) last Thursday. He left the interest rate unchanged at 1.75 percent. The SNB therefore refrained from reducing the interest rate differential with the euro zone.
Another reason for the SNB’s interest rate decision is the development of inflation in Switzerland, which has weakened relatively significantly in recent months. Another reason is the assumption that the franc has appreciated too much this year, according to the SNB’s wishes. This could be heard from those around the SNB ahead of last week’s interest rate decision (more on this in the Cash article).
The SNB uses the strong franc as a tool to prevent inflation. This means that it sells its own foreign currencies, thereby increasing the demand for francs in the foreign exchange markets. According to observers, the SNB’s “target range” for preventing inflation is between 0.95 and 1 franc per euro. The last time the franc reached parity with the euro was at the beginning of March.
According to analysts at Commerzbank, devaluation pressure on the franc will therefore be limited. A more serious devaluation of the franc would lead to the intervention of the SNB. The upside potential for the euro/franc currency pair is quite low, as the euro is currently under devaluation pressure after the European Central Bank signaled the end of its rate hike cycle.
On Wednesday, the common currency fell to its lowest level against the dollar since last March. Overnight, the price dropped to $1.0559.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
