The Swiss franc dipped against the euro and the greenback on Wednesday after the Swiss National Bank announced it would eliminate
exemptions from its policy of negative interest rates for certain public
accounts, including the central bank’s pension fund.
Peter Rosenstreich, head of market strategy at Swissquote, said that the action indicates that the central bank’s policy of negative interest rates hasn’t been as effective at driving capital away from the franc as the central bank had hoped.
“If things were going well, they wouldn’t need to expand it the way they are,” Rosenstreich said.
Sebastien Galy, director of FX strategy at Société Générale, said that in the near future the central bank is likely planning to lower rates further into negative territory.
At its Jan. 15 meeting, the regulator lowered its benchmark rate to a record-low negative 1.25% and shocked the market causing unprecedented volatility in the franc by scrapping a policy peg that kept the euro from falling below 1.20 swiss francs per euro.
June 18 will be the date of the next rate-setting meeting.
In the recent trade, one euro was worth 1.0335 francs, compared with 1.0257 francs Tuesday afternoon. One dollar was worth 0.9645 franc, compared with 0.9553 Tuesday.
The euro has gained 4.8% against the franc from a year-to-date low of 0.9848 francs reached on Jan. 23.
In other currency trading, the dollar regained ground against the yen after having recorded losses earlier in the global day, as Japanese officials reported the country’s first monthly trade surplus in nearly three years.
In a note to clients, Camilla Sutton, chief FX strategist at Scotiabank, said that while Japanese exports showed strong growth, imports fell 14.5% from a year ago.
Japan’s Nikkei Stock Average closed above 20,000 for the first time in 15 years Wednesday, a move that analysts said would support the dollar.
