Inflation may ease upward pressure on CHF – Scotiabank

The CHF is the best performing major currency so far this year, gaining 3.5% on the USD, the best among the core peers. Economists at Scotiabank analyze Franc’s outlook.

The trend decline in EUR/CHF may stabilize around the 0.95 point

While inflation has moderated somewhat and has clearly moved back below 2%, policymakers appear to be leaning towards some additional ‘insurance’ tightening to take the SNB’s key policy rate to 2%. 

Easing inflation pressures may spill over into the currency’s broader trend. Policymakers have favoured a somewhat stronger exchange rate to help dampen price pressures. 

The trend decline in EUR/CHF (more than 5.5% this year) may stabilize around the 0.95 point. 

We anticipate a EUR rebound to 0.98 by year-end.

USD/CHF – Q3-23 0.88 Q4-23 0.88 Q1-24 0.87 Q2-24 0.87