Swiss Protests Will Continue
Swiss Protests Will Continue
Despite carry-trade interest, the franc will continue to gain support from the National Bank warnings over inflation and currency weakness.
The Swiss currency found support close to 1.2330 against the dollar and pushed back to 1.2285 on Friday. Rising risk tolerances will tend to undermine the Swiss currency in the short term, but underlying capital flows are liable to prove unstable.
National Bank Chairman Roth continued to warn that the inflation outlook had deteriorated while the economy was performing strongly. Roth also stated that the bank would need to tighten monetary policy further if franc weakness undermined the impact of high interest rates.
The remarks will maintain some speculation over a 0.5% interest rate increase in September and the possibility of an inter-meeting rate increase which will underpin the franc. The bank stance should deter aggressive franc selling in the short term.
Originally Posted by mostafa12
Bookmarks