The Swiss franc is continuing its streak of gains on Monday, despite recent allegations that Switzerland is manipulating its currency. The franc is also finding direction on the latest trade prices, which have fallen over the last 12 months as Switzerland suffers from global trade uncertainty. Will the franc remain a safe-haven currency moving forward?
In its semi-annual report, the Treasury Department added Switzerland to its list of countries where it believes are partaking in questionable currency practices. The US government alleges that the Swiss National Bank (SNB) significantly increased its foreign exchange purchases for the last six months to boost trade.
While the SNB has acquired immense sums of foreign currencies over the last few years to reduce demand for the franc, the central bank rejects accusations of its interventions as means to diminish the currencyâs value to gain a trading advantage. SNB officials say that its export-dependent economy has been damaged from an overvalued franc.
The Ministry of Finance also weighed in on the decision and confirmed that it is not manipulating the franc for a competitive gain in global trade. It did dismiss the idea of immediate ramifications.
Analysts note that the US adding Switzerland to its list of potential currency manipulations might dissuade the SNB from continued intervention.
On the data front, producer and import prices edged up 0.1% in December, but year-on-year they are down 1.7%, according to the Federal Statistical Office (FCO). The Balance of trade data will be released on Tuesday and the market is forecasting the trade surplus will fall from $2.2 billion to $1.8 billion in December.
The USD/CHF currency pair rose 0.09% to 0.9688, from an opening of 0.9680, at 16:24 GMT on Monday. The EUR/CHF advanced 0.05% to 1.0741, from an opening of 1.0733.
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