Latest news with #Swissie
The Hindu
23-04-2025
- Business
- The Hindu
Swiss franc's surge on tariff turmoil pressures SNB to act
The Swiss franc's rapid appreciation on U.S. policy uncertainty could force the Swiss National Bank to intervene soon, as Swiss industry hopes the safe haven currency's surge can be tamed before it deals another blow to a tariff-threatened sector. The franc has surged roughly 9% against the dollar so far this month, and is set for the biggest monthly gain since the 2008 financial crisis. Last week it hit its strongest level since January 2015 when the SNB scrapped its minimum exchange rate. That has pulled the franc, also known as the Swissie, up 2.6% against the euro in April, taking it close to its strongest level in more than 10 years. But the rush into the franc, spurred by concerns about U.S. President Donald Trump's trade policy gyrations, puts the SNB's 0-2% inflation target at risk by depressing the cost of imports at a time when inflation is already near zero. It also hurts Swiss exporters potentially facing 31% U.S. tariffs by making their goods dearer abroad. "The rise of the Swiss franc is the final ingredient for a poisonous cocktail for Swiss industry," said Jean-Philippe Kohl, vice director of industry association Swissmem. "Companies are already struggling with weak demand abroad, the threat of massive American tariffs on Switzerland, and uncertainty caused by President Trump's trade policy." Swissmem refrained from demanding SNB action, but would welcome any moves by the central bank to mitigate the franc's rise, Kohl said. Interventions, rather than rate cuts, are probably the SNB's best tool, with its key rate already at 0.25% and expected to dip further, analysts say. "If everybody is fearful and insecurity is high, nobody really cares about the interest rate in Switzerland," said Thomas Stucki, former head of asset management at the SNB and Chief Investment Officer at St Galler Kantonalbank. Selling francs to weaken the currency would be a shift for the SNB, which bought only 1.2 billion francs of forex last year and sold foreign currencies worth nearly 133 billion francs in 2023 as it sought to shore up the Swissie to cool inflation. Interventions carry their own risks, such as Washington branding Switzerland a currency manipulator. This occurred in 2020 during Trump's first administration. ING's global head of markets Chris Turner said one factor in the background driving Swissie strength, on top of safe-haven flows, was markets questioning "whether the SNB will be as able to undertake large scale FX buying as they have in the past." Pain threshold? The SNB said this month it does not engage in currency manipulation and only intervenes to foster price stability. It has also said it could return to negative rates. But negative rates were unpopular with banks, savers and pension funds when the SNB imposed them from late 2014 to 2022, making interventions look easier to manage. UBS economist Maxime Botteron did not rule out that limited sales of francs by the SNB were already underway, but he did not expect systematic interventions. "Interventions are more flexible than interest rate cuts – the SNB can go into the market, sell some francs to ease the appreciation, and then stop," he said. The SNB declined to comment on the franc's value or how it would react. It's the currency's rally against the euro that policymakers are likely watching most since the bulk of Swiss trade is with eurozone members, giving euro-denominated imports more influence over inflation. In 2023, 57% of Swiss imports were invoiced in euros, compared with 13% in dollars. The central bank has said it does not look at particular currency pairs, but a basket of currencies when deciding policy, and would act to meet its inflation target. Swiss Re's Head of Macro Strategy Patrick Saner said intervention was likely, especially with the real effective exchange rate of the franc reaching post-2015 highs. "The speed and magnitude of the recent Swiss franc rally, particularly since April 2, significantly raises the odds that the SNB is close to seeing this as a "threshold moment" for intervention," he said. "While political optics matter.... intervention remains likely if price stability is at risk."
Yahoo
23-04-2025
- Business
- Yahoo
Analysis-Swiss franc's surge on tariff turmoil pressures SNB to act
By John Revill ZURICH (Reuters) -The Swiss franc's rapid appreciation on U.S. policy uncertainty could force the Swiss National Bank to intervene soon, as Swiss industry hopes the safe haven currency's surge can be tamed before it deals another blow to a tariff-threatened sector. The franc has surged roughly 9% against the dollar so far this month, and is set for the biggest monthly gain since the 2008 financial crisis. Last week it hit its strongest level since January 2015 when the SNB scrapped its minimum exchange rate. That has pulled the franc, also known as the Swissie, up 2.6% against the euro in April, taking it close to its strongest level in more than 10 years. But the rush into the franc, spurred by concerns about U.S. President Donald Trump's trade policy gyrations, puts the SNB's 0-2% inflation target at risk by depressing the cost of imports at a time when inflation is already near zero. It also hurts Swiss exporters potentially facing 31% U.S. tariffs by making their goods dearer abroad. "The rise of the Swiss franc is the final ingredient for a poisonous cocktail for Swiss industry," said Jean-Philippe Kohl, vice director of industry association Swissmem. "Companies are already struggling with weak demand abroad, the threat of massive American tariffs on Switzerland, and uncertainty caused by President Trump's trade policy." Swissmem refrained from demanding SNB action, but would welcome any moves by the central bank to mitigate the franc's rise, Kohl said. Interventions, rather than rate cuts, are probably the SNB's best tool, with its key rate already at 0.25% and expected to dip further, analysts say. "If everybody is fearful and insecurity is high, nobody really cares about the interest rate in Switzerland," said Thomas Stucki, former head of asset management at the SNB and Chief Investment Officer at St Galler Kantonalbank. Selling francs to weaken the currency would be a shift for the SNB, which bought only 1.2 billion francs of forex last year and sold foreign currencies worth nearly 133 billion francs in 2023 as it sought to shore up the Swissie to cool inflation. Interventions carry their own risks, such as Washington branding Switzerland a currency manipulator. This occurred in 2020 during Trump's first administration. ING's global head of markets Chris Turner said one factor in the background driving Swissie strength, on top of safe-haven flows, was markets questioning "whether the SNB will be as able to undertake large scale FX buying as they have in the past." PAIN THRESHOLD? The SNB said this month it does not engage in currency manipulation and only intervenes to foster price stability. It has also said it could return to negative rates. But negative rates were unpopular with banks, savers and pension funds when the SNB imposed them from late 2014 to 2022, making interventions look easier to manage. UBS economist Maxime Botteron did not rule out that limited sales of francs by the SNB were already underway, but he did not expect systematic interventions. "Interventions are more flexible than interest rate cuts – the SNB can go into the market, sell some francs to ease the appreciation, and then stop," he said. The SNB declined to comment on the franc's value or how it would react. It's the currency's rally against the euro that policymakers are likely watching most since the bulk of Swiss trade is with eurozone members, giving euro-denominated imports more influence over inflation. In 2023, 57% of Swiss imports were invoiced in euros, compared with 13% in dollars. The central bank has said it does not look at particular currency pairs, but a basket of currencies when deciding policy, and would act to meet its inflation target. Swiss Re's Head of Macro Strategy Patrick Saner said intervention was likely, especially with the real effective exchange rate of the franc reaching post-2015 highs. "The speed and magnitude of the recent Swiss franc rally, particularly since April 2, significantly raises the odds that the SNB is close to seeing this as a "threshold moment" for intervention," he said. "While political optics matter.... intervention remains likely if price stability is at risk." Sign in to access your portfolio
Reuters
23-04-2025
- Business
- Reuters
Swiss franc's surge on tariff turmoil pressures SNB to act
ZURICH, April 23 (Reuters) - The Swiss franc's rapid appreciation on U.S. policy uncertainty could force the Swiss National Bank to intervene soon, as Swiss industry hopes the safe haven currency's surge can be tamed before it deals another blow to a tariff-threatened sector. The franc has surged roughly 9% against the dollar so far this month, and is set for the biggest monthly gain since the 2008 financial crisis. Last week it hit its strongest level since January 2015 when the SNB scrapped its minimum exchange rate . That has pulled the franc, also known as the Swissie, up 2.6% against the euro in April, taking it close to its strongest level in more than 10 years . But the rush into the franc, spurred by concerns about U.S. President Donald Trump's trade policy gyrations, puts the SNB's 0-2% inflation target at risk by depressing the cost of imports at a time when inflation is already near zero. It also hurts Swiss exporters potentially facing 31% U.S. tariffs by making their goods dearer abroad. "The rise of the Swiss franc is the final ingredient for a poisonous cocktail for Swiss industry," said Jean-Philippe Kohl, vice director of industry association Swissmem. "Companies are already struggling with weak demand abroad, the threat of massive American tariffs on Switzerland, and uncertainty caused by President Trump's trade policy." Swissmem refrained from demanding SNB action, but would welcome any moves by the central bank to mitigate the franc's rise, Kohl said. Interventions, rather than rate cuts, are probably the SNB's best tool, with its key rate already at 0.25% and expected to dip further, analysts say. "If everybody is fearful and insecurity is high, nobody really cares about the interest rate in Switzerland," said Thomas Stucki, former head of asset management at the SNB and Chief Investment Officer at St Galler Kantonalbank. Selling francs to weaken the currency would be a shift for the SNB, which bought only 1.2 billion francs of forex last year and sold foreign currencies worth nearly 133 billion francs in 2023 as it sought to shore up the Swissie to cool inflation. Interventions carry their own risks, such as Washington branding Switzerland a currency manipulator. This occurred in 2020 during Trump's first administration. ING's global head of markets Chris Turner said one factor in the background driving Swissie strength, on top of safe-haven flows, was markets questioning "whether the SNB will be as able to undertake large scale FX buying as they have in the past." PAIN THRESHOLD? The SNB said this month it does not engage in currency manipulation and only intervenes to foster price stability. It has also said it could return to negative rates. But negative rates were unpopular with banks, savers and pension funds when the SNB imposed them from late 2014 to 2022, making interventions look easier to manage. UBS economist Maxime Botteron did not rule out that limited sales of francs by the SNB were already underway, but he did not expect systematic interventions. "Interventions are more flexible than interest rate cuts – the SNB can go into the market, sell some francs to ease the appreciation, and then stop," he said. The SNB declined to comment on the franc's value or how it would react. It's the currency's rally against the euro that policymakers are likely watching most since the bulk of Swiss trade is with eurozone members, giving euro-denominated imports more influence over inflation. In 2023, 57% of Swiss imports were invoiced in euros, compared with 13% in dollars. The central bank has said it does not look at particular currency pairs, but a basket of currencies when deciding policy, and would act to meet its inflation target. Swiss Re's Head of Macro Strategy Patrick Saner said intervention was likely, especially with the real effective exchange rate of the franc reaching post-2015 highs. "The speed and magnitude of the recent Swiss franc rally, particularly since April 2, significantly raises the odds that the SNB is close to seeing this as a "threshold moment" for intervention," he said. "While political optics matter.... intervention remains likely if price stability is at risk."
Al Etihad
10-03-2025
- Business
- Al Etihad
Stocks stumble, bond selloff abates as investors take stock of US trade policy
7 Mar 2025 10:27 SINGAPORE (REUTERS)Investors were met with some calm on Friday after a turbulent week besieged by U.S. trade policy confusion and a global rise in borrowing costs, as a steep selloff in bonds abated and currencies steadied, though stocks tracked Wall Street the Nasdaq confirmed it has been in a correction since peaking last December, as U.S. stocks face headwinds from a darkening growth outlook in the world's largest economy and uncertainty over U.S. President Donald Trump's tariff on Thursday suspended the 25% tariffs he imposed this week on most goods from Canada and Mexico until April 2 - the day he has threatened to impose a global regime of reciprocal tariffs on all U.S. trading fast-changing trade policy has sent markets into a tailspin, though currencies like the yen and the Swiss franc, as well as gold, have been among the few assets investors have flocked to as they seek out Japanese currency was perched near its strongest level in five months at 147.95 on Friday, on track for a 1.8% weekly gain, while the Swissie scaled a three-month top of 0.8822 per prices eased slightly, but at $2,904.62 an ounce, were still not far from a record high."The rapidly shifting sands of U.S. tariffs are turning into quicksand for businesses in the U.S., Canada and Mexico to drown in," said Tony Sycamore, a market analyst at IG."I'm not particularly confident at this point in time committing money to the market because there is just so much uncertainty out there. It's a horrible, horrible backdrop for investors to be operating in."A sharp selloff in European bond markets triggered by Germany's plans for a huge spending package showed some signs of tapering on Friday, with bund futures jumping more than 0.8% and French OAT futures up 0.7%. Bond yields move inversely to Japan, government bonds extended their selloff, though to a smaller degree than in the previous 10-year Japanese government bond (JGB) yield rose 1.5 basis points to 1.53%, its highest level since June 2009, while the 20-year yield added 2 bps to a more than 16-year high of 2.22%.The surge in European borrowing costs this week has in turn sent the euro on a tear, with the common currency headed for its largest weekly gain in nearly five years on Friday at more than 4%. It last traded 0.07% higher at $ European Central Bank (ECB) on Thursday cut interest rates again but warned of "phenomenal uncertainty", including the risk that trade wars and more defence spending could fuel inflation, raising the prospect of a pause in its policy easing next month."The ECB finds itself in a challenging position between the threat of U.S. tariffs in the near-term that could warrant further policy rate cuts - and a move into stimulative territory - and the growing commitment to higher defence spending over the next several years," said Mark Wall, chief European economist at Deutsche Bank."This environment requires a deft hand on the monetary policy lever and the preservation of policy optionality."ASIA STOCKS UPBEATMSCI's broadest index of Asia-Pacific shares outside Japan last traded 0.5% lower, though was on track for a weekly gain of more than 2.5%, which would mark its largest increase in nearly six rise was helped by a rally in its Chinese counterparts as investors continued to pile into artificial intelligence shares and welcomed new policy support from CSI300 blue-chip index fell 0.2%, but was set to rise 1.5% for the week, while the Shanghai Composite Index was similarly on track for a 1.85% weekly Kong's Hang Seng Index rose 0.3% and was headed for a more than 6% surge for the week."We expect significant fiscal easing this year, with increased priorities on consumption and high-tech manufacturing, but acknowledge this is different from a 'bazooka'," Goldman Sachs analysts said in a Japan's Nikkei slid 1.85%.Trade tensions aside, the focus for investors on Friday will also be on February's U.S. nonfarm payrolls report, which will provide further clues on the health of the world's largest are for 160,000 jobs to have been added last month, following January's 143,000 have ramped up bets of further Federal Reserve rate cuts this year following a slew of weaker-than-expected U.S. economic data and worries about the impact of Trump's tariffs, with Fed funds futures now showing just over 77 bps worth of easing priced in this has in turn sent the dollar on the decline, with the greenback set for a weekly drop of more than 3% against a basket of currencies. In commodities, Brent futures rose 0.27% to $69.65 a barrel, while U.S. West Texas Intermediate crude futures ticked up 0.2% to $66.49 per barrel.
Zawya
07-03-2025
- Business
- Zawya
Stocks stumble, bond selloff abates as investors take stock of US trade policy
SINGAPORE: Investors were met with some calm on Friday after a turbulent week besieged by U.S. trade policy confusion and a global rise in borrowing costs, as a steep selloff in bonds abated and currencies steadied, though stocks tracked Wall Street lower. Overnight the Nasdaq confirmed it has been in a correction since peaking last December, as U.S. stocks face headwinds from a darkening growth outlook in the world's largest economy and uncertainty over U.S. President Donald Trump's tariff policies. Trump on Thursday suspended the 25% tariffs he imposed this week on most goods from Canada and Mexico until April 2 - the day he has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners. Trump's fast-changing trade policy has sent markets into a tailspin, though currencies like the yen and the Swiss franc, as well as gold, have been among the few assets investors have flocked to as they seek out safety. The Japanese currency was perched near its strongest level in five months at 147.95 on Friday, on track for a 1.8% weekly gain, while the Swissie scaled a three-month top of 0.8822 per dollar. Gold prices eased slightly, but at $2,904.62 an ounce, were still not far from a record high. "The rapidly shifting sands of U.S. tariffs are turning into quicksand for businesses in the U.S., Canada and Mexico to drown in," said Tony Sycamore, a market analyst at IG. "I'm not particularly confident at this point in time committing money to the market because there is just so much uncertainty out there. It's a horrible, horrible backdrop for investors to be operating in." A sharp selloff in European bond markets triggered by Germany's plans for a huge spending package showed some signs of tapering on Friday, with bund futures jumping more than 0.8% and French OAT futures up 0.7%. Bond yields move inversely to prices. In Japan, government bonds extended their selloff, though to a smaller degree than in the previous session. The 10-year Japanese government bond (JGB) yield rose 1.5 basis points to 1.53%, its highest level since June 2009, while the 20-year yield added 2 bps to a more than 16-year high of 2.22%. The surge in European borrowing costs this week has in turn sent the euro on a tear, with the common currency headed for its largest weekly gain in nearly five years on Friday at more than 4%. It last traded 0.07% higher at $1.0794. The European Central Bank (ECB) on Thursday cut interest rates again but warned of "phenomenal uncertainty", including the risk that trade wars and more defence spending could fuel inflation, raising the prospect of a pause in its policy easing next month. "The ECB finds itself in a challenging position between the threat of U.S. tariffs in the near-term that could warrant further policy rate cuts - and a move into stimulative territory - and the growing commitment to higher defence spending over the next several years," said Mark Wall, chief European economist at Deutsche Bank. "This environment requires a deft hand on the monetary policy lever and the preservation of policy optionality." ASIA STOCKS UPBEAT MSCI's broadest index of Asia-Pacific shares outside Japan last traded 0.5% lower, though was on track for a weekly gain of more than 2.5%, which would mark its largest increase in nearly six months. The rise was helped by a rally in its Chinese counterparts as investors continued to pile into artificial intelligence shares and welcomed new policy support from Beijing. China's CSI300 blue-chip index fell 0.2%, but was set to rise 1.5% for the week, while the Shanghai Composite Index was similarly on track for a 1.85% weekly gain. Hong Kong's Hang Seng Index rose 0.3% and was headed for a more than 6% surge for the week. "We expect significant fiscal easing this year, with increased priorities on consumption and high-tech manufacturing, but acknowledge this is different from a 'bazooka'," Goldman Sachs analysts said in a note. Elsewhere, Japan's Nikkei slid 1.85%. Trade tensions aside, the focus for investors on Friday will also be on February's U.S. nonfarm payrolls report, which will provide further clues on the health of the world's largest economy. Expectations are for 160,000 jobs to have been added last month, following January's 143,000 rise. Investors have ramped up bets of further Federal Reserve rate cuts this year following a slew of weaker-than-expected U.S. economic data and worries about the impact of Trump's tariffs, with Fed funds futures now showing just over 77 bps worth of easing priced in this year. That has in turn sent the dollar on the decline, with the greenback set for a weekly drop of more than 3% against a basket of currencies. In commodities, Brent futures rose 0.27% to $69.65 a barrel, while U.S. West Texas Intermediate crude futures ticked up 0.2% to $66.49 per barrel. (Reporting by Rae Wee; Editing by Jamie Freed)
