SNB Made First Meaningful Franc Sales in Three Years After Trump’s Tariffs Triggered Surge

Core Viewpoint - The Swiss National Bank (SNB) has made significant foreign exchange interventions to counteract the appreciation of the Swiss franc, primarily triggered by external economic pressures, notably from the U.S. tariff policies under Donald Trump [1][3]. Group 1: SNB Interventions - The SNB purchased foreign exchange worth 5.1 billion francs (approximately $6.4 billion) in the second quarter, aligning with UBS Group AG's estimates [2]. - This marks the end of a 15-month period during which the SNB had minimal market interactions, highlighting the volatility following Trump's announcement of "reciprocal tariffs" [3]. - The franc appreciated by about 10% against the dollar and 2% against the euro during the April-June period, indicating significant market movements [3]. Group 2: Policy Context - The SNB's decision to sell francs, despite previous U.S. criticisms, reflects limited options for countering market pressures, as rate cuts have proven ineffective in weakening the currency [4]. - A joint statement from Switzerland and the U.S. emphasized a commitment to avoid currency manipulation, with the SNB focusing on maintaining price stability [4][5]. - Since June, Switzerland has been monitored by the U.S. Treasury for its foreign exchange policies, amidst rising tensions due to tariffs imposed on Swiss exports [5]. Group 3: SNB's Strategic Approach - SNB President Martin Schlegel has reiterated that interventions aim to prevent Swiss inflation from deviating significantly [6]. - The SNB appears to be adopting a more cautious approach to currency interventions, focusing on strategic confrontations with traders rather than aggressive market mobilization [7]. - Historically, the SNB has intervened with tens of billions to manage the franc, asserting that the currency is overvalued [7].