![]() ![]() The Swiss franc equalled to 6 grams and three quarters of pure silver or 1.5 Fr. In 1798 the Helvetic Republic introduced a new monetary system based on the thalers from Berna, divided into 10 batzen or 100 rappen. Some of these currencies were thalers from Bern, Zurich, Basel and Geneva or the florin of Fribourg, among others. Prior to 1798, around 75 entities minted coins in Switzerland, resulting in 860 different types of currencies in circulation, with different values, denominations and monetary systems. Also, this is also the currency of Lichtenstein. That would be last line of defence before parity," he said.The franc is the official currency of Switzerland, subdivided into 100 cents (“rappen” in Swiss-German). "I do think they will try to halt any appreciation at 1.03. Until now, the SNB has done the right thing not wasting too much money defending the franc, said J Safra Sarasin economist Junius. "There is a risk of a renewed flight to safety and a strengthening of the currencies considered as safe havens, and therefore of the Swiss franc." "Now the situation is getting more complicated for the SNB," said ING economist Charlotte de Montpellier. The stance of the SNB will be tested in the coming days, particularly if the omicron variant of coronavirus increases demand for the franc. "This warrants a lower intervention threshold for the SNB, even at this point it is unclear where this new threshold exactly is." "From this perspective at 1.05 the franc is not strongly over-valued anymore," said Bee. The question is, however, what a strong overvaluation means," said UBS economist Alessandro Bee.ĭue to the much stronger inflation in the Eurozone than in Switzerland, the fair value of the franc has climbed to 1.11 to the euro from 1.20 last year, he said. "The long-term policy of the SNB remains in place: fight a strong overvaluation of the Swiss franc. Swiss inflation at 1.2% is well within the SNB's definition of price stability and reduces the need to act. Over the weekend, governing board member Andrea Maechler said the SNB was monitoring the franc's level, although the central bank didn't target a specific rate, she said. "We don't expect parity to be reached next year, but we think it will happen in the next two to three years." "It's clear from the development of inflation in Europe and Switzerland the franc will become more expensive over time," he said. The franc was on course to eventually reach parity, Stucki added. "They will prevent the movement below 1.04 to 1.03" he added. "If the franc stays at this level of around 1.05, a little bit above, a little bit below, the SNB won't do a lot," said Thomas Stucki, the chief investment officer at St Galler Kantonalbank and the former manager of the SNB's foreign currency reserves. The SNB declined to comment about Monday's data and the economists' reaction to it. Instead, the central bank may be storing up its firepower to prevent rapid and large-scale appreciation instead, economists say. The development could mean the SNB has given up restraining the franc at its current level, because of benign Swiss inflation and the country's robust economy. "Still, an increase of less than 100 million francs shows the SNB chose not to defend the 1.05 level," said J.Safra Sarasin economist Karsten Junius. One factor for the small increase could be the withdrawal by bank customers of cash, economists say, which happens every year in the lead up to Christmas and reduces the amount of cash the banks hold on sight with the SNB. 2015.īut the latest sight deposit data - a proxy for the SNB's interventions - increased by only 94 million francs last week, a fraction of the forex purchases seen last year. The level is not far off the 1:1 against the euro the franc briefly reached after the SNB's last policy shift in Jan.
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