DCHF - Swiss Franc Strength Threatens Switzerland's Economy Making Heavier Intervention More Likely

• The Swiss franc has continued to strengthen in 2020, with both GBP/CHF and EUR/CHF weaker as compared to the year's opening prices.
• The strength of the Swiss franc is a threat to the Swiss economy, as it makes Swiss exports less competitive.
• Lowering the SNB's short-term interest rate further could be destabilizing. The only real alternative appears to involve heavier intervention.
• One solution could involve the SNB expanding its acquisitions of listed international assets. Reducing the level of intervention on the other hand (i.e., conceding to the U.S. Treasury) would be very risky.
• Therefore, while the outlook for CHF is mixed, the probability is building for further and aggressive intervention measures, and therefore, the possibility of an ultimate reversal to long-term CHF downside.

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