SNB’s quiet days in Zurich give CEO Jordan respite as Franc sinks

Bloomberg

Thomas Jordan might have had the quietest August since he became Swiss National Bank president five years ago.
Considered the haven of all havens by foreign exchange traders, the franc typically shoots up against other currencies whenever investors get anxious. This year, with no Greek debt crisis and the prospect that euro-area bond purchases might soon be wound down, Switzerland’s currency has been depreciating. It has fallen nearly 6 percent against the euro since the start of 2017 and touched the lowest in 2 1/2 years earlier.
“I think Jordan’s holidays this year were very much more relaxed than in years past—if you look at the data, they seem not to have been intervening much,” said Nadia Gharbi, an economist at Banque Pictet & Cie. in Geneva. “The economy should continue to improve, the depreciation of the Swiss franc is welcome for the exporters.”
While that’s welcome news for the SNB, which has used negative rates and interventions to keep the currency in check since early 2015, the franc’s recent fall isn’t enough for officials to consider any changes to monetary policy. For that to happen, the European Central Bank will have to first raise rates.
In past years, June, July and August were months of particular activity for Swiss policy makers. In the summer of 2011, when Jordan was SNB vice president, the franc nearly touched parity with the euro on investor concerns about Greece’s debts, prompting several rounds of easing measures that finally culminated in the central bank setting a cap on the franc in early September. Summer anxiety about peripheral European nations’ sovereign debt continued in 2015, while in 2016 it was Britain’s referendum to leave the European Union that upended financial markets.
With the euro-area economy appearing increasingly resilient and ECB policy makers potentially preparing to scale back stimulus, markets have returned to relative calm, albeit with a bouts of risk-aversion caused by North Korea tensions. The SNB’s inflation-adjusted exchange-rate index shows the franc at its weakest against the euro since December 2014 and sight deposits, closely watched by economists for clues to the central bank’s interventions, have slowed their rise.