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The Swiss National Bank bought foreign exchange worth 2.8 billion francs ($3.1 billion) in the third quarter just before the franc began a sharper appreciation against the euro.
This month the franc broke through a key level of 1.04 per euro and continued to strengthen toward 1.03 during the final days of 2021. That might challenge the central bank's description of the franc as “highly valued,” a term it has used since 2017 -- it previously called its currency “significantly overvalued.”
Along with negative interest rates, interventions are a key pillar of SNB policy. On Dec. 16, SNB President Thomas Jordan and fellow policy makers reiterated their pledge to supplement subzero rates with currency purchases as needed.
Jordan said the real trade-weighted exchange rate has “hardly changed since the beginning of the pandemic,” so the SNB didn't need to change its assessment. He also noted the currency has helped the country escape the inflation spike seen in the euro area and the U.S.
The SNB spent 110 billion francs on foreign exchange last year as the Covid-19 crisis roiled markets, which resulted in the U.S. Treasury Department labeling the alpine nation a foreign currency manipulator. The U.S. has since dropped the designation and the intensity of SNB interventions eased as the global economy recovered from the pandemic.
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