Barclays expects the Swiss franc to strengthen despite the Swiss National Bank's dovish stance

Investing.com - Barclays maintains its expectation that the Swiss franc will gradually strengthen, despite the Swiss National Bank showing a dovish stance at the March meeting. The investment bank states that the Swiss central bank is still unwilling to limit the franc’s appreciation through negative interest rates or significant foreign exchange interventions.

The firm notes that the “higher willingness” to intervene in the foreign exchange market mentioned in the recent Swiss National Bank statements does not necessarily indicate a shift in policy stance. Barclays points out that these statements are driven by an environment conducive to larger-scale safe-haven capital flows.

According to Barclays’ analysis, the trend in the current account suggests that the Swiss economy has so far been well-positioned to withstand foreign exchange shocks, implying that the franc is only modestly overvalued. The bank states that, in an environment of strong safe-haven demand, the Swiss National Bank’s largely unchanged response continues to point toward a sustained appreciation of the Swiss franc.

The Swiss National Bank maintained a dovish stance at the March meeting while remaining cautious about currency interventions. Barclays indicates that the central bank’s reluctance to deploy more aggressive policy tools remains a key factor supporting the franc.

The investment bank’s outlook reflects its expectation that, despite ongoing safe-haven demand for the Swiss currency, the Swiss National Bank will continue to maintain its current policy stance.

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