Swiss bets of the francs bets on the return to negative interest rates

The Swiss franc rose to the highest level in the contract against the dollar, as investors rushed to shelter from global commercial turmoil, which raised the stakes that the central bank in the country will have to reduce interest rates to zero or less to reduce the high currency.

The coin, which is historically, has a haven in the financial market due to political and economic stability in the country of the Alps, reached a record force against the dollar this week, as Greenback was drowned near SFR0.80 for the first time since the franc shock was estimated in 2015.

This was put in place politicians in Will, as they seek to curb the currency to support the heavy economy export without provoking a violent reaction from the United States, which has already threatened Switzerland with high definitions.

“The crosses” put the central bank in a “very difficult” position.

He added: “The Swiss government does not want great pressure to inflation in this again, so it is frustrated.”

The return on short -term government debt has decreased to negative lands in recent days, as merchants are betting that the Swiss National Bank will respond with discounts in interest rates. Swiss revenues were traded for two years, which reflect interest rate expectations, in a marginal way less than zero on Friday.

Analysts say that the rapid estimate of the franc is shocked by a deviation of Switzerland, says analysts, which exacerbated the effect of US President Donald Trump’s growth.

31 percent, the “mutual” definitions on Swiss goods exceeded earlier this month – before their suspension for 90 days – the fees on the European Union. Switzerland relies on American consumers for more than 10 percent of exports.

The situation prompted the government to a diplomatic attack.

Swiss President Karen Keeler Street, the Minister of Finance, made a phone call to Trump hours before the announcement of the customs tariff. This week, I traveled to Washington with the Minister of Economy to hold a meeting with US Treasury Secretary Scott Beesen, who said they discussed “chances of strengthening cooperation between the two countries.”

Switzerland, which historically sought to curb its currency, is not alien to sharp moves. In January 2015, SNB suddenly canceled its policy of allocating the value of the franc against the euro, and sending the currency to a height.

Analysts say Bern is afraid that the United States will be described by the United States again if it could intervene significantly in the markets to curb it in the franc.

Switzerland has been added to an American list of “currency manipulators” in the last weeks of Trump’s first presidency, in part due to its interference in expanding financial turmoil from the Koronavirus virus. It was removed from the list under the management of Biden.

The franc also rose against the euro, leaving the country that depends on export in a difficult position with its largest commercial partner.

SNB has already moved faster than its peers to reduce the main interest rate to 0.25 percent, and more discounts are seen as a safer in diplomatic point of view to arrest the franc height.

SNB kept much lower rates for eight years – partially to stop your franc francs far away – before raising it to a positive area in 2022 to combat the explosion in the inflation that followed the epidemic.

“If SNB is not satisfied with the strong and restricted FX on FX interventions, less rates are the only option,” said Francesco Pissol, FX strategic expert in ing.

Stefan Geralash, EFG’s chief economist, said that negative interest rates “may happen well”, adding that the currency’s income may also be necessary.

Gralash reduced Switzerland’s chances that were classified on currency maneuvers again. He said that there is a feeling between “adults in the room” in the US Treasury Ministry that this is not a problem.

“This may be a problem if you pay the exchange rate to gain a competitive advantage. But it is not a problem if your currency increases and tries to reduce its height.”

The markets are pricing with the opportunity of about 80 percent of the rate of decrease in the rate to zero at the next meeting in June, with a small opportunity to move to negative lands later in the year, according to the levels involved in the bubble markets.

Annual inflation sits about 0.3 percent, already at the low end of the target scope of the central bank from zero to 2 percent.

Gregor Kabver, the head of Swiss bonds in Fontopille, said that the Swiss Central Bank is “definitely concerned”, on the pretext that the larger intervention will be “the last resort.”

“During the recent management of Trump, they were called a currency processor, but there were no truly consequences. Now Trump is following him, so I think SNB will be more cautious here.”

But Athanasios Vamvakidis, Global President of America for the G10 FX strategy, suggested that SNB “tend against the wind” with some interventions.

“It is difficult to imagine that the American administration will complain about some intervention” given the rapid estimate of the currency, adding that this approach seemed more likely than negative interest rates.

If we leave regardless of the shock of 2015, the dollar is closed at its lowest level against the franc.

“The franc may need a quieter world than this,” said Société générale’s juckes. “The danger is, as history says, over time, it becomes stronger.”