Franc Bears Disappointed as UBS Lifts Projection for Currency
March 25, 2014 8:18 am
UBS AG, Switzerland’s largest bank, lifted its projections for the franc versus the euro as the Swiss currency’s world-beating advances in the past six months confound those expecting it to decline.
UBS made a forecast that the franc will exchange with a slight alteration at 1.22 in a month. That compares with its past projection of 1.25, strategists including Gareth Berry and Geoffrey Yu wrote in a note published today. The new three-month projection is 1.24, from 1.27 previously. The Swiss National Bank last week bring down its inflation goal and promised to guard its franc cap of 1.20 per euro set in September 2011.
Analysts have trim down their projections for a decline in the Swiss currency through June to the least in nine months. That’s a concern for Swiss policy makers, who introduced the cap to prevent exports from turning uncompetitive. SNB Alternate Board Member Thomas Moser said today the central bank was ready to enforce the cap using its currency reserves, and was prepared to take further actions if needed.
“Last week the SNB was very conservative, this means they view the situation with a great deal of caution,” London-based Yu said today in a telephone interview. “Sending this message shows the SNB expects the price pressures to be on the downside. We don’t see any big short-term moves” in the euro-franc exchange rate, he said.
Most Stable Projection
The franc inched down 0.1 percent to 1.2191 per euro as of 4:42 p.m. London time. It bolstered versus all of its 16 major counterparts in the past six months through the end of last week.
The franc will exchange at 1.23 per euro at the end of June, according to the median projection of more than 50 analysts in a Bloomberg News survey. That’s the most stable projection since the data was first collected in June 2013.
The International Monetary Fund today suggested that the SNB continue its cap of 1.20 per euro and said the central bank may introduce negative rates on reserves of commercial banks if the franc skyrockets further.
The franc was overvalued by 12 percent last month, in comparison with 11.1 percent in January, based from the gauge of its effective strength in real terms against the currencies of 40 exchanging partners published in the central bank’s monthly statistical bulletin.
The SNB projects yearly consumer financial values will stagnate this year, before advancing 0.4 percent in 2015, it said last week. It has earlier predicted 0.2 percent for 2014 and 0.6 percent for next year.
The material has been provided by InstaForex Company – www.instaforex.com
UBS AG, Switzerland’s largest bank, lifted its projections for the franc versus the euro as the Swiss currency’s world-beating advances in the past six months confound those expecting it to decline.
UBS made a forecast that the franc will exchange with a slight alteration at 1.22 in a month. That compares with its past projection of 1.25, strategists including Gareth Berry and Geoffrey Yu wrote in a note published today. The new three-month projection is 1.24, from 1.27 previously. The Swiss National Bank last week bring down its inflation goal and promised to guard its franc cap of 1.20 per euro set in September 2011.
Analysts have trim down their projections for a decline in the Swiss currency through June to the least in nine months. That’s a concern for Swiss policy makers, who introduced the cap to prevent exports from turning uncompetitive. SNB Alternate Board Member Thomas Moser said today the central bank was ready to enforce the cap using its currency reserves, and was prepared to take further actions if needed.
“Last week the SNB was very conservative, this means they view the situation with a great deal of caution,” London-based Yu said today in a telephone interview. “Sending this message shows the SNB expects the price pressures to be on the downside. We don’t see any big short-term moves” in the euro-franc exchange rate, he said.
Most Stable Projection
The franc inched down 0.1 percent to 1.2191 per euro as of 4:42 p.m. London time. It bolstered versus all of its 16 major counterparts in the past six months through the end of last week.
The franc will exchange at 1.23 per euro at the end of June, according to the median projection of more than 50 analysts in a Bloomberg News survey. That’s the most stable projection since the data was first collected in June 2013.
The International Monetary Fund today suggested that the SNB continue its cap of 1.20 per euro and said the central bank may introduce negative rates on reserves of commercial banks if the franc skyrockets further.
The franc was overvalued by 12 percent last month, in comparison with 11.1 percent in January, based from the gauge of its effective strength in real terms against the currencies of 40 exchanging partners published in the central bank’s monthly statistical bulletin.
The SNB projects yearly consumer financial values will stagnate this year, before advancing 0.4 percent in 2015, it said last week. It has earlier predicted 0.2 percent for 2014 and 0.6 percent for next year.
The material has been provided by InstaForex Company – www.instaforex.com
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