SNB Prepares for Brexit Chaos Amid Growing Tensions
On June 16, the SNB held its interest rates at a negative 0.75 percent, as was expected by most analysts. It also renewed its commitment to step in and intervene if the situation required it.
“Fundamentally, we have room to maneuver on these two instruments,” Jordan said, speaking of interest rates and market interventions. “In a first phase, should the situation arise, it will be about stepping in to markets in a stabilizing manner to prevent exaggerations.”
From its Singapore office, the Swiss central bank will keep a close eye on the markets and is said to be ready to react within minutes, if need be.
Fears of another parity (or worse) are still fresh in investor’s minds, and the SNB is said to be determined to defend a 1.05 level with all it has. Last year, the economy grew by less than 1 percent because of the strong franc.
“For many professionals and business people, the CHF/EUR question goes way beyond a simple asset management and forex question. It influences the very livelihood of many exporters of goods and services throughout the country. Everyone will be looking very closely at what will happen with Brexit”, explained Marwan Naja, CEO of Manixer, a Geneva-based private equity firm.
The SNB amassed a colossal $600 billion in foreign currencies, as it had pegged the franc to the euro at 1.2 between 2011 and 2014.
By Lovisa Alvin