![]() This said, if the Swiss franc appreciates, then foreign currency investments’ value in francs fall. The SNB’s portfolio can record mark-to-market losses depending on market performance, and so the main risk is higher interest rates for bonds and stock market declines. Of these total assets, around 90% are in the form of foreign currency investments, mostly denominated in US dollars and euros, with 75% invested in bonds and 25% in equities. That is the highest proportion of any major central bank. Total assets at 30 June 2022 were CHF990bn, or about 140% of Switzerland’s gross domestic product (GDP). The SNB’s openness to selling foreign-denominated investments to buy the Swiss franc would have the benefit of helping to reduce the central bank’s balance sheet, while adding to the appreciation pressures on the franc. However, when adjusted for inflation, it is about 12% weaker, and explains why the SNB can now afford to let the currency strengthen. Compared with the highest euro-franc rates of early 2015 when the SNB abandoned its floor against the euro, or during the 2011 eurozone debt crisis, the Swiss currency has appreciated as much as 9% in nominal terms. Still, while the franc has strengthened in nominal terms, it has not done so in real, inflation-adjusted terms. More recently, the franc has strengthened in response to the eurozone’s slowing economies, geopolitical exposure to the war in Ukraine and in particular, rapidly rising energy prices. Currency movements are by definition relative changes, and the franc has appreciated in response to demand from investors for a haven currency. In nominal terms, the franc gained 40% against the euro since the common currency’s inception in 1999, and more than 30% against the US dollar over the same period. The Swiss currency’s strength is not a story of a year or two but long-term appreciation. This means that the exchange rate is a large component of Swiss inflation. While that is less than half the 7.5% rise recorded in Germany in the same month, some of that is trickling into Switzerland’s small, open economy as it imports more expensive goods, including crude oil, and services from its neighbours. Inflation in Switzerland increased 3.4% in July compared with a year earlier. SNB President Thomas Jordan said that policymakers have not ruled out interventions “in both directions so that we can buy or sell foreign currency if necessary.” This is a significant change for a central bank that has been selling the Swiss franc for much of the last 14 years.Ī strong currency is a logical response to keeping imports as cheap as possible and containing consumer prices. ![]() The 50 basis-point hike was its first rate rise since 2007. The rates are intended for information purposes only.In response to prospect of higher interest rates in the eurozone, on 16 June the SNB increased its own rates. ![]() The exchange rates on Danmarks Nationalbank's website are indicative rates that are not intended to be used in any market transaction. Read more about the euro foreign exchange reference rate on ECB's website.īased on the determined reference rate between euro and Danish kroner, Danmarks Nationalbank calculates a price in Danish kroner for the remaining 30 currencies.ĮCB publishes the reference rates determined at the concertation at 16:00 and shortly after Danmarks Nationalbank publishes the prices in Danish kroner. ECB then determines the most accurate reference rate and during the concertation these rates with any adjustments are finally agreed among ECB and the participating central banks. The reference rates are based on actual exchange rates in the interbank market and are set at the mid-price of the sell and buy side at the time of the concertation.Īt the time when the concertation begins and the reference rates are to be determined, ECB will obtain the price for euro in a number of currencies, including Danish kroner, from the interbank market via correspondent banks and electronic trading platforms. The European Central Bank (ECB) conducts a daily concertation procedure at 14:15, at which time 31 exchange rates are agreed among a number of central banks. The exchange rates published on Danmarks Nationalbank's website are the prices in Danish kroner for 100 units of the foreign currency. ![]()
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