Last week, with EUR / CHF for the first time in two years is very close to the established Swiss National Bank (SNB) level of 1.2, updating at least 1.2008. This result was the logical outcome of which lasted from May last year downtrend, one of the drivers of which was more favorable economic situation in Switzerland compared to its main trading partner - the euro area.
Another positive signal from the Swiss economy was the October index of business activity in the country grew sharply from 50.4 to 55.3 points, well above the consensus forecast of economists (51.7). There is a feeling that this indicator has broken the negative trend that occurred in the current year.
But not only macroeconomic statistics has led to the strengthening of the Swiss franc against the euro two-year highs. Test the patience of the SNB Franc inspired the situation surrounding the referendum on the foreign exchange reserves, which will be held in Switzerland next Sunday, November 30th.
Let me remind the issue. As you know, the SNB set a minimum exchange rate valid for the pair EUR / CHF at 1.2 francs per euro. In order to prevent a decline in the pair below that mark the Swiss central bank has repeatedly conducted foreign exchange intervention by buying the single European currency in its approach to the secret level. Naturally, as a result of the euro's share in international reserves increased SNB.
All is good, but this year, the single European currency depreciated significantly against many currencies competitors. So, in tandem with the US dollar since the beginning of the year she has lost about 10%. As a result, Swiss society began to sound management of the accusations against the central bank - say, it is crammed "portfolio" rates, which melts on the eyes - and thus melt and foreign exchange reserves of the country. So the idea of a referendum, which should make the SNB to focus on purchases more reliable, according to the initiators of the plebiscite, the asset - gold. In particular, the proposed legislation to oblige the central bank to keep in gold, at least 20% of its reserves (now the share of the yellow metal in the reserves of the SNB 8%), and forbid him to the sale of this asset. In addition, the initiative involves the repatriation of Switzerland that part of the gold reserves is stored abroad - in the UK and Canada.
Why is pending referendum Frank went on the offensive against the euro? It's simple: if the supporters of the initiative will win, the Swiss central bank to resist possible weakening of the euro will fall. Their resources SNB will have to throw out first, to diversify reserves in favor of gold, and then buying it every time the proportion of the metal on the balance sheet will fall below 20%. So, to protect the level of 1.20 in the pair EUR / CHF resources may not be enough (especially if the central bank does not have to buy euros, and spend it on the replenishment of gold) ... Such concerns were the reason for the sales and the euro against the Swiss franc.
But there is another scenario - the defeat of the supporters of the imposition of a popular vote initiative. And, it seems, on November 30 this scenario is realized. Guide SNB said about the dangers of trying to tie his freedom of action artificial restrictions. And, apparently, the Swiss people to hear it. In any case, if earlier polls showed that the idea of diversification of reserves in favor of the gold support 44% of respondents, according to the data of November 19, support initiatives decreased to 38%.
So, most likely, the Swiss referendum on Sunday rejected the idea of dictating to legislate the structure of central bank reserves. And on Monday, with EUR / CHF may react to the news jump up, which is able to be the beginning of the medium-term upward movement. And if we, the National Bank will support this movement through intervention ... In general, the idea of buying the euro against the Swiss franc near the level of 1.20 seems to me very interesting. To the author Sergey Glushkov
