Swiss Franc Advances Thanks to Increased Money Supply

The Swiss franc rose against all other major currencies except euro today, as the traders reacted on increased M3 money supply as a sign of a probability for a stricter monetary policy in the future, despite the commentaries by the central bank president.

The franc advanced against the US dollar and the Japanese yen, while staying near the opening level against the single European currency today. The Swiss National Bank released its statistical report today showing a growth of M3 money supply by 6.6 percent in 2010 and a real estate index for the single-family homes at 390.0 (up from 384.3) in the fourth quarter of 2010. Both indicators sent the franc up against its Forex counterparts.

Meanwhile, Philipp Hildebrand, President of SNB, yesterday said the over-appreciating franc is posing a serious danger for the Swiss economy:

Not least because of the franc’s gains, the Swiss National Bank expects a notable slowdown in economic growth… The euro area’s stability is an absolutely essential factor for the Swiss franc and for the Swiss economy as a whole.

Despite that, today’s macroeconomic statistics caused another bullish day in Swiss currency rates, albeit not against the euro, which seems to be a target currency for SNB.

USD/CHF fell from 0.9673 to 0.9594 as of 16:48 GMT today. CHF/JPY rose from 85.76 to 86.12, while the EUR/CHF pair is still trading close to its open level of 1.3023.

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