Swiss Franc Slides After SNB Rate Decision

(RTTNews) - The Swiss franc weakened against other major currencies in the European session on Thursday, after the Swiss National Bank retained its key interest rate at zero percent, as widely expected.

Banks' sight deposits held at the central bank will be remunerated at the SNB policy rate up to a certain threshold, the bank said. The discount for sight deposits above this threshold was unchanged at 0.25 percentage points.

The SNB had lowered its key rate by 175 basis points since March 2024. The bank exited its negative rate in 2022 after holding it steady for over seven years.

The SNB said it is willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions.

The bank forecast inflation to average 0.7 percent this year and 0.8 percent each in 2027 and 2028.

The SNB expects moderate economic growth for the coming quarters. Growth is seen between 1.5 percent and 2 percent this year and around 1.5 percent in 2027.

The recent decline in the value of the Swiss franc, according to SNB Chair Martin Schlegel, is partially due to growing interest rate differences with other currency regions. He reiterated that the central bank is still prepared to interfere in the foreign exchange market if needed but stressed that Switzerland's relatively low interest rates make the currency less appealing when compared to the Euro and the US dollar (USD).

In the European trading today, the Swiss franc fell to nearly a 1-1/2-year low of 0.8284 against the U.S. dollar, from an early high of 0.8229. The franc is likely to find support around the 0.83 region.

Against the euro and the yen, the franc slipped to 3-day lows of 0.9434 and 191.06 from an early near 3-week high of 0.9373 and more than a 2-week high of 192.49, respectively. If the franc extends its downtrend, it is likely to find support around 0.95 against the euro and 187.00 against the yen.

The franc dropped to a 2-day low of 1.0968 against the pound, from an early near 3-week high of 1.0900. On the downside, 1.10 is seen as the next support level for the franc.

Looking ahead, Canada retail sales for July, average weekly earnings for July, U.S. current account data for the second quarter, U.S. weekly jobless claims data, building permits for August, new home sales for August and U.S. Kansas Fed composite index for September is slated for release in the New York session.