Jordan of the Swiss National Bank: Euro-Franc parity economically insignificant

FILE PHOTO: Swiss National Bank (SNB) Chairman Thomas Jordan gestures as he addresses a news conference in Bern, Switzerland, June 17, 2021. REUTERS/Arnd Wiegmann/File Photo

March 26, 2022

ZURICH (Reuters) – The Swiss National Bank believes the Swiss franc’s rise against the euro above parity will not have a major impact on the economy, its Chairman Thomas Jordan said in an interview broadcast on Saturday.

The Swiss currency has surged as investors sought safe haven assets during the Ukraine war. It rose above CHF 1 to EUR 1 earlier this month before weakening to around CHF 1.02 per euro. A year ago, one euro cost 1.10 francs.

“It doesn’t mean much from an economic point of view,” Jordan told Swiss radio station SRF when asked if the franc’s rise above parity was a level the central bank would fight against.

“We don’t make any predictions about where the exchange rate will go, but it’s important that we don’t just look at the euro, but all currencies together … and also the inflation differences, that’s very important.”

Higher inflation outside of Switzerland has mitigated the impact of the stronger franc, he said, as Swiss companies are generally coping well with the currency’s higher valuation.

Swiss inflation has risen to 2.2%, the highest since 2008, but remains low compared to the United States and Europe, Jordan said.

In its latest update on Thursday, the SNB maintained its accommodative monetary policy and left interest rates at minus 0.75%, but doubled its inflation forecast for this year.

The central bank will continue to monitor inflation closely, Jordan said, and will also monitor exchange rate movements.

“The franc remains highly valued…and that’s why we remain ready to intervene in FX markets, if necessary, to prevent the franc from becoming too strong,” Jordan said.

(Reporting by John Revill; Editing by Barbara Lewis and Christina Fincher)