- The Swiss franc continues to appreciate.
- The euro traded below par on Thursday and cost CHF 0.997.
- The currency pair is now trading above the important parity mark again.
- On Wednesday, the euro fell below the parity mark for the first time since March.
The EUR/CHF pair fell relatively clear below parity on Thursday afternoon, marking a new year’s low at 0.99435. In the meantime, however, the pair is trading above the psychologically important mark again at 1.0012. The Swiss franc also appreciated slightly against the dollar and was traded at 0.9566 (USD/CHF).
After the Swiss National Bank surprisingly hiked interest rates two weeks ago and no longer described the franc as high, market participants said it was only a matter of time before the euro fell below the parity mark against the franc.
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“As long as the European Central Bank reacts at a snail’s pace to the high inflation rates, the franc will continue to appreciate,” said a comment by VP Bank on Wednesday. This is particularly evident on trading days with pronounced risk aversion. “It is true that a rapid march to levels of 0.90 cannot be assumed. But prices below parity will probably become the norm.”
According to a recent study by CS, the SNB could also soon end its foreign exchange purchases, which have helped to ease the appreciation pressure on the Swiss franc. Because after more than a decade of almost exclusively unilateral interventions in the foreign exchange market, the inflation outlook no longer allows for a significant depreciation of the Swiss franc, experts wrote on Wednesday.