Low inflation and SNB’s intervention stance limit CHF strength amid geopolitical risks, offsetting traditional safe-haven flows.
The Swiss National Bank’s heightened willingness to intervene in currency markets has tempered Swiss Franc gains, despite ongoing geopolitical tensions. With headline inflation at 0.6% year-over-year in April and core inflation at 0.3%, the SNB sees little urgency for tightening, prioritizing FX stability instead.
The SNB warned in March that inflation could rise due to the Iran war but emphasized its increased readiness to act against CHF strength. Since late February, the Franc has been the third-worst performing G10 currency, reflecting the impact of this policy stance.
Geopolitical risks, including the Iran conflict and potential disruptions in the Strait of Hormuz, could still drive safe-haven demand. However, the SNB’s intervention signals suggest limited upside for the Franc in the near term.