Swiss central bank continues to vacuum up foreign currencies

The relative values of the dollar and franc are going in separate directions. Martin Ruetschi

The Swiss National Bank (SNB) spent almost CHF25 billion ($28 billion) in the foreign currency markets in the third quarter, raising its reserves to CHF938 billion so far this year. Two days ago, Switzerland was branded a currency manipulator by the United States.

This content was published on December 18, 2020 - 11:52

The latest figures, released on Friday, show the rate of foreign currency intervention slowed between July and the end of September. In the first six months of the year the SNB had poured CHF90 billion into applying the brakes on the franc’s rising value.

At the same time, the SNB’s current account surplus decreased from CHF13 billion in June to CHF9 billion in September. This is another key parameter on the US currency manipulation watchlist.

The coronavirus pandemic has only increased investor interest in the franc, while the US dollar has generally fallen in value against other currencies this year. At its quarterly monetary policy meeting on Thursday, the SNB vowed to continue with its foreign currency intervention.

"Had we not intervened, the franc would have appreciated significantly more, and this would have placed an additional burden on our economy in an already exceptionally challenging environment," noted Andréa Maechler, a member of the SNB governing board.


The US ambassador to Switzerland Ed McMullen played down the currency manipulation debate, telling Le Temps newspaper that it was a “purely mechanical decision” that bears little resemblance in tone to a manipulation claim issued against China last year.

Martin Naville, CEO of the Swiss-American Chamber of Commerce, has also sought to downplay the dispute. In an open letter with the sub-heading “let’s not get overly excitedExternal link”, Naville urges people to “relax” and “look at the facts” rather than rely on the “breathless reporting” of the media.

“Looking at the development of the Swiss Franc–US Dollar exchange rate, it is clear that there is currently either no currency manipulation or Switzerland is doing a very poor job. In the last 20 years, the Swiss Franc appreciated 100% to the US Dollar! In 2001, one Swiss Franc cost US$ 0.57, today it costs US$ 1.14! Tell me about manipulation,” he writes.

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