The franc reached an unprecedented level against the euro on Wednesday, before weakening somewhat. But overall the strengthening of the Swiss currency should continue, according to specialists.
Verse 16h40, Swiss currency was trading at 0.9886 francs per euro after briefly strengthening to 0.9877 EUR/CHF. In the evening, however, the rating was displayed at 0.9929 francs.
“This level represents, apart from the day of chaos on January 15, 2015 (when the floor rate was abandoned at 1.20 francs) a historic low” for the currency pair, Thomas told the AWP news agency. Heller, director of investments at Belvédère Asset Management.
>> See the evolution of the franc against the euro over 10 years
For John Plassard, analyst at Mirabaud Banque, “the level has never been so low for the EUR/CHF since the creation of the single currency”, if we exclude the abandonment of the floor rate by the Swiss National Bank (SNB).
>> Read also: The abandonment of the floor rate against the euro upsets the markets
SNB rate and euro weakness
The Swiss currency has been strengthened since the surprise hike on June 16 of the key rate by the SNB. The latter was raised by 50 basis points to -0.25%.
>> Read also: The SNB raises its key rate and raises its inflation forecasts
But the currency pair’s recent move is mostly down to Euro weakness. According to the Valiant bank, the current depreciation suffered by the European single currency comes from a fear of an energy crisis in Europe following the reduction of gas deliveries by Russia. The euro is all the more weakened by the reluctance of the European Central Bank (ECB) to fight against galloping inflation, unlike the American Federal Reserve (Fed) or the SNB.
What limit set by the SNB?
According to Thomas Heller, the Swiss issuing institute authorizes a certain appreciation of the franc, beneficial to fight against imported inflation. But from a certain level, the SNB should intervene, estimated the expert. The latter thus sees a red line around 0.95 EUR/CHF.
>> Also listen to the interview with François Savary, head of investments at Prime Partner, on the possibility that the SNB will stop defending parity with the euro
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