SNB unlikely to object to modest depreciation of the CHF – Standard Chartered

The Swiss Franc (CHF) has been the weakest performer in G10 year-to-date. Economists at Standard Chartered analyze CHF outlook.

It would take a very hawkish SNB to strengthen the CHF further

The CHF has been the weakest performer YTD in G10 and we expect this subpar performance to continue. 

It would take a very hawkish SNB to strengthen the CHF further and we don’t see much reason for them to go in that direction, even if they hold steady in March and do not commit to a cut in June.

By most measures, the CHF real effective exchange rate is well above historical averages, and we doubt that the SNB would object to modest depreciation. 

Barring a geopolitical shock, we expect it to be a funding currency for both G10 and EM trades.