Forex News: Swiss Franc Falls As SNB Keeps Key Interest

Swiss Franc Falls As SNB Keeps Key Interest Rate At Zero

(RTTNews) - The Swiss franc weakened against other major currencies in the European session on Thursday, after the Swiss National Bank decided to hold its benchmark rate and signaled increased willingness to intervene in the foreign exchange market to counter the excessive appreciation of currency amid the conflict in the Middle East.

The central bank left its policy rate at zero percent on Thursday, in line with market expectations.

The SNB had reduced the key rate by 175 basis points since March 2024. The bank exited its negative rate in 2022 after holding it for over seven years.

Banks' sight deposits held at the central bank will be remunerated at the SNB policy rate up to a certain threshold. The discount for sight deposits above this threshold still stands at 0.25 percentage points, the bank said.

Inflation is forecast to increase more strongly in the coming quarters due to the rise in energy prices amid the escalation in the Middle East.

The bank lifted its inflation forecast for 2026 to 0.5 percent from 0.3 percent but lowered the estimate for 2027 to 0.5 percent from 0.6 percent. The rate was projected at 0.6 percent in 2028.

In the European trading today, the Swiss franc fell to more than a 2-week low of 0.9130 against the euro and more than a 3-week low of 199.94 against the yen, from early highs of 0.9069 and 201.80, respectively. If the franc extends its downtrend, it is likely to find support around 0.91 against the euro and 198.00 against the yen.

Against the pound and the U.S. dollar, the franc slid to nearly a 1-1/2-month low of 1.0566 and nearly a 2-month low of 0.7958 from early highs of 1.0494 and 0.7910, respectively. The franc may test support near 1.07 against the pound and 0.80 against the greenback.

Looking ahead, U.S. building permits for January, weekly jobless claims data, U.S. Philly Fed business conditions for March, U.S. new home sales and wholesale inventories for January are due to be released.

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