Swiss National Bank slows foreign currency interventions to a trickle in 2024
By John Revill
ZURICH (Reuters) – The Swiss National Bank greatly reduced its activity in foreign currency markets during 2024, according to data published on Tuesday, as the central bank relied instead on interest rates to steer monetary policy.
The SNB bought foreign currency worth 1.2 billion Swiss francs ($1.4 billion) in 2024, its annual report said, with its purchases slowing to a trickle in the fourth quarter.
The data suggested the SNB bought 88 million francs’ worth of foreign currency in the last three months of the year, after buying 1.11 billion francs worth in the previous nine months.
The full-year figure contrasts sharply with the 132.9 billion Swiss francs of foreign currencies sold by the SNB during 2023 as the bank sought to boost the franc as a shield against imported price rises.
“While the SNB had sold foreign currency in 2022 and 2023 to tighten monetary conditions, it announced at the monetary policy assessment in December 2023 that it was no longer focusing on foreign currency sales,” the SNB said.
The strategy was effective, with Swiss inflation running at 1.1% during 2024, in the middle of the central banks’ targeted rate for annual price rises of 0-2%.
Economists said the decline in currency market activity by the SNB meant it was happy with the level of the Swiss franc and instead favoured interest rates to steer inflation.
During 2024 the SNB cut rates at each of its four meetings from 1.75% at the start of the year to 0.5% in December. Analysts forecast a 25 basis point cut at its next meeting on Thursday.
“There was no need for forex interventions by the SNB at all last year,” said Karsten Junius, an economist at J. Safra Sarasin. “The Swiss franc was not misaligned with fundamentals and fairly valued.
“Instead the SNB chose to control inflation through interest rates, which is the key tool for them now rather than forex purchases and sales.”
($1 = 0.8814 Swiss francs)
(This story has been refiled to add a missing word in paragraph 9)
(Reporting by John Revill, Editing by Friederike Heine and Hugh Lawson)
