The Swiss National Bank (SNB) in the third quarter reported foreign currency sales amounting to 37.63 billion Swiss francs ($44.73 billion), signalling a winding down of its recent measures to bolster the Swiss franc and curtail imported inflation.

SNB's forex activity

This marked the second-largest volume of forex sales since the SNB began publicising its transaction data in 2020. Analysts anticipate this substantial sell-off to represent the culmination of such endeavours for the time being. With Swiss inflation retreating to the SNB's targeted range of 0–2 per cent and resting at 1.4 per cent as of November, Chairman Thomas Jordan conveyed a shift in focus during the SNB's recent monetary policy assessment in December, indicating the bank's move away from foreign currency sales.

The reported sale in the three months leading to September marked a decline from the unprecedented 40.3 billion francs' worth of various currencies, including dollars and euros, sold by the bank in the previous quarter.

Amidst the Swiss franc's ascent against the dollar and euro, reaching 0.93525 against the euro this week, its highest level since January 2015, anticipations of interest rate cuts by the European Central Bank contributed to this surge.

The transistion of forex

Previously engaged in purchasing foreign currency to counter the rapid appreciation of the safe-haven franc, the SNB switched to forex sales in the second quarter of 2022.

UBS economist Maxime Botteron anticipates reduced sales in the final three months of 2023 and significantly decreased activity in early 2024. The subsiding Swiss inflation and the franc's ascent have diminished the necessity for continued SNB forex sales, leading Botteron to speculate on minimal interventions in the first quarter of 2024 unless inflation accelerates beyond current forecasts.

(With Reuters inputs)

SNB shifted to forex sales, ceasing prior efforts against the francs surge.

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