Trump tariffs led Swiss National Bank to increase foreign currency purchases

Core Viewpoint - The Swiss National Bank (SNB) significantly increased its foreign currency purchases in Q2 2023 to counteract appreciation pressure on the Swiss franc following U.S. tariff announcements, marking the highest level of interventions in over three years [1][2]. Currency Interventions - The SNB purchased 5.06 billion Swiss francs (approximately $6.36 billion) in foreign currencies during April to June, a notable increase compared to only 1.26 billion francs over the previous five quarters [1][4]. - The interventions were likely aimed at stabilizing the foreign exchange market amid a 7% surge of the franc against the U.S. dollar and a 2.2% increase against the euro in April [2][3]. Economic Context - The appreciation of the franc is seen as a threat to the SNB's goal of maintaining price stability, with annual inflation targeted between 0-2% [3]. - Increased political uncertainty and market volatility have contributed to inflows into the franc, prompting the SNB's actions [2][3]. Future Outlook - The SNB Chairman indicated that the bank would continue to utilize all available tools, including currency interventions, to achieve its inflation targets if necessary [4]. - The SNB faces a dilemma between increasing forex interventions, which could attract negative attention from the U.S., or lowering interest rates below 0%, which is undesirable for the bank [5][6].