Seems they are willing to take the credit risk to support their exporters at the expense of the macro economy, rather than cut taxes to sustain domestic demand:
(Dow Jones) — A Swiss National Bank official reiterated Sunday that the central bank will act decisively to prevent excessive appreciation of the Swiss franc against the euro, adding the central bank is taking into account the development of the economy in its entirety.
Wonder if our administration will go after them the way it is going after China for doing same.
Bad to buy dollars and US treasury securities vs your currency to support your exports — currency manipulation.
Good to buy dollars to buy treasury securities to, in the words of Secretary of State Clinton, enable the US to buy your products.
US policy could not be more confused and contradictory.
SNB Attention May Have ‘Shifted’ to Targeting Dollar, RBC Says
By Daniel Tilles
July 10 (Bloomberg) —The Swiss National Bank may target the franc’s appreciation against the dollar more than the euro, according to RBC Capital Markets.
“Since the SNB started intervening in March, euro-franc is up 2.2 percent, but dollar-franc is down over 9 percent,†Sue Trinh, a senior currency strategist in Sydney, wrote today in a report. “If the SNB’s attention has now shifted to dollar- franc, it would be consistent with the SNB’s change in tactics from intervening via euro-franc to dollar-franc in their most recent round of intervention and suggests dollar-franc may now be the better way to express the threat of SNB intervention at current levels.â€
The dollar rose 0.5 percent to 1.0842 francs as of 8:10 a.m. in Zurich.
SNB to Maintain Currency Purchases, Roth Tells Handelsblatt
By Simone Meier
July 10 (Bloomberg) —The Swiss central bank will continue to buy foreign currencies if needed to weaken the franc and prevent deflation, President Jean-Pierre Roth told Handelsblatt.
“We stick to our policy in a decisive manner,†Roth told the newspaper in an interview published today. “We don’t announce an exchange-rate target but observe that the franc hasn’t appreciated further.â€
While the Swiss National Bank is “relatively well prepared†to withdraw its stimulus measures, the bank is “still far away from a change in rate policy,†Roth said.
The Swiss economy could return to “slightly positive†growth rates in 2010 after shrinking between 2.5 percent and 3 percent this year, according to Roth. He called it a “good sign†that UBS AG, the country’s largest bank, managed to find private investors. “It shows that the market has regained confidence in the bank and that there’s light at the end of the tunnel,†Roth told Handelsblatt.
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>
> On Thu, Mar 12, 2009 at 9:10 AM, EDWARD wrote:
>
> In conjunction with lowering rates to 0.25% (3m libor target- this is important- its NOT
> the overnight or refi rate) and maintaining a 0-75bp range they also announced the following:
>
> *SNB PLANS TO BUY WISS FRANC BONDS
> *SNB SAYS TO BUY CURRENCIES TO AVOID FRANC APPRECIATION
>
Beggar thy neighbor export driven policy here too- yet another player trying to drive down their currency!
Failing to see the advantages of increasing domestic demand, seems most are turning to policies to drive exports.
Too bad we don’t have the leadership to take advantage of this once in a lifetime opportunity ratchet up our real standard of living.
>
> *SNB TO BUY SWISS FRANC BONDS BY PRIVATE SECTOR
>
> With the following statements:
>
> *SNB SAYS RISING FRANC COMMENTS TIGHTENS MONETARY CONDITIONS
> *SNB TO COUNTERACT RISK OF DEFLATION, ECONOMIC WORSENING
> *SNB SAYS SWISS FRANC APPRECIATED SUBSTANTIALLY SINCE AUGUST 07
> *SNB SEES ANNUAL INFLATION AT CLOSE TO ZERO FOR NEXT TWO YEARS
> *SNB EXPECTS INCREASED CONTRACTION IN 1Q
> *SNB SAYS SWISS EXPORT SECTOR PARTICULARLY HIT
> *SNB SAYS ECON WORSENING HAS CONTINUED IN PAST TWO MONTHS
> *SNB: SWISS AVG 2009 INFLATION SEEN -0.5%, 2010 INFLATION 0%
> *SNB SAYS MAGNITUDE OF ECONOMIC CONTRACTION IN 4Q UNEXPECTED
>
> They are deploying all weapons, rightly perceiving the vast threat to their economy
> and stepping up to the front lines- unlike the ECB who would still prefer to discuss
> targeted limits to easing rates and inflationary threats which do not exist.
>
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