The Swiss franc from one record to another

The Swiss franc fell below parity with the euro today. The decline of the common European currency thus continues. 

Economists believe the Swiss National Bank (SNB) is changing its tactics, ending currency purchases and no longer aiming to weaken the franc in view of accelerating inflation.

At 5:08 p.m. one euro was trading at 0.9991 francs. 

Swiss franc reaches parity with the euro

SNB: end of foreign currency purchases

As a result, the Swiss central bank should stop the foreign exchange purchases it has been making for several years with the aim of avoiding an excessive strengthening of the franc, which would be detrimental to exporters. Credit Suisse points out in a study that the SNB has accumulated about 775 billion francs in foreign currency since 2009. But in an environment of strong price acceleration, a strong franc limits imported inflation.

The SNB could therefore sell foreign currencies if the franc weakens, as it “does not seem willing to tolerate a significant depreciation of the franc,” the bank’s specialists write. The threshold for intervention would be around 1.04-1.05 EUR/CHF.