Euro-swiss franc exchange rate saw the largest drop since Q2 2016. The SNB hiked rates by 50bps, this came as a surprise to markets as the median expectation was the key rate to be left unchanged at -0.75%, according to data compiled by Bloomberg. The bank reiterated that the franc remains 'highly valued' and that it is ready to intervene if needed. However, the bank also mentioned that it is ready to buy CHF in case of a depreciation
The balanced tone on FX policy confirmed the notion that the SNB is giving a green light to a stronger currency. This makes sense when inflation is above the central bank target of 2%, and a stronger currency is desired to maintain prices capped for Swiss exports. Whether this might work or not is another topic, inflation is imported due to a rise in energy prices and this market has been impacted by global developments, not domestic demand. This applies to most developed markets after the invasion of Ukraine sent commodity prices higher
The franc strengthened by a massive 250pip move or 2.5%, to close near 1.02 from a prior open of 1.0380. To the dollar, the CHF posted a move of 2.86%, the largest since the SNB decison to unpeg


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