24 Mar 2015
Repatriation forced the SNB to remove the floor - Nomura
FXStreet (Bali) - Yujiro Goto and Jordan Rochester, FX Strategists at Nomura, wrote in a report to clients that repatriation was one of the main driver forcing the SNB to eventually remove the floor.
Key Quotes
"Swiss Q4 BOP data shows that (1) improvement in current account surplus, (2) repatriation of foreign bonds by Swiss investors, and (3) net FDI inflows into Switzerland were major flow drivers behind CHF appreciation pressure. Repatriation of foreign bonds by Swiss investors was especially strong, as it recorded the biggest repatriation in four years."
"Interestingly, foreign investors were small net sellers of Swiss equities and bonds. Basic balance recorded the biggest surplus since Q2 2012, which forced the SNB to intervene in the FX market (and ultimately give up the floor). For the SNB, it will be important to prevent any reacceleration in foreign bond repatriation by Swiss investors to avoid CHF appreciation and a deflation impact from the appreciation."
Key Quotes
"Swiss Q4 BOP data shows that (1) improvement in current account surplus, (2) repatriation of foreign bonds by Swiss investors, and (3) net FDI inflows into Switzerland were major flow drivers behind CHF appreciation pressure. Repatriation of foreign bonds by Swiss investors was especially strong, as it recorded the biggest repatriation in four years."
"Interestingly, foreign investors were small net sellers of Swiss equities and bonds. Basic balance recorded the biggest surplus since Q2 2012, which forced the SNB to intervene in the FX market (and ultimately give up the floor). For the SNB, it will be important to prevent any reacceleration in foreign bond repatriation by Swiss investors to avoid CHF appreciation and a deflation impact from the appreciation."