Breaking News: Swiss National Bank Intervenes in Forex Markets to Weaken Swiss Franc - BofA Securities Analysts Predict Further Depreciation
In a recent move to combat market turmoil, the Swiss National Bank (SNB) has intervened in the foreign exchange markets to weaken the Swiss franc (CHF). BofA Securities analysts anticipate further depreciation of the CHF as the Real Effective Exchange Rate (REER) has recovered from its year-to-date decline, putting pressure on the SNB to loosen monetary conditions.
The SNB's intervention last week was the second largest of the year, highlighting the central bank's dual strategy of using rate changes and FX sales to achieve its inflation target. The recent surge in sight deposits, the second largest since April, indicates the SNB's significant response to sharp and volatile currency movements.
Amidst rising Middle-East tensions, the CHF saw a rally that led to a rate cut decision by the SNB on June 20th. BofA's analysis suggests a bias towards further weakening of the CHF against currencies like the Australian dollar (AUD) and the British pound (GBP), with potential gains in EUR/CHF and USD/CHF pairings.
Despite the recent gains in the CHF, BofA reminds readers that the fundamental outlook between Switzerland and its peers remains unchanged, making CHF shorts attractive once more based on positioning as the main driver.
In conclusion, the SNB's intervention in the forex markets and the potential for further CHF depreciation could have implications for global investors and forex traders. It is essential to monitor these developments and adjust investment strategies accordingly to capitalize on potential opportunities in the currency markets.