Swiss National Bank board member Philipp Hildebrand said the Swiss franc's development on currency markets was a "conundrum", while adding markets should not assume exchange rates would stay as stable as they had in recent years.
"Market operators should not believe that the foreign currency situation should always be as stable as it has been in the past four years," Hildebrand told Swiss newspaper SonntagsZeitung.
"The exchange rate development of the (Swiss) franc is in a sense a conundrum, a riddle," Hildebrand told the newspaper in an interview.
The franc has depreciated againt the euro over the past two years.
SNB chairman Jean-Pierre Roth said on Tuesday that economic fundamentals and low inflation were still supporting the franc and that the Swiss central bank would stick to its policy of gradual monetary tightening.
Most economists are predicting another 25 basis points rate rise in December and many expect a further hike in March next year.
The franc is still trading close to a 6-1/2-year low of 1.5968 it reached in mid-September against the euro after the SNB raised its benchmark interest rate to 1.75 percent. Hilbebrand's remarks in Sunday's interview echoed Roth's comments.
"Fundamental data for the franc are good. And the monetary policy normalisation in the form of interest rate tightening, in the midst of a still strong economic cycle, is continuing in Switzerland," said Hildebrand.
Hildebrand warned that it was up to investors to weigh up the risks of carry trades, in which they borrow in low-yielding currencies, such as the yen and the Swiss franc, in order to fund investments in higher-yielding assets. "It is up to the market operators to evaluate the risks," he said. "Our responsibility is to remind everyone that we have a flexible currency regime and that the currency risk remains. Changes in exchange rates are always possible."
Comments
Comments are closed.