Swiss National Bank won't be deterred by currency manipulator tag

ZURICH: The Swiss National Bank will not be deterred from its expansive monetary policy course by the United States' designation of Switzerland as a currency manipulator, Chairman Thomas Jordan said on Monday.

The SNB still regards both foreign currency interventions and negative interest rates as vital to stem appreciation pressure on the Swiss franc, Jordan told SRF TV show ECO.

"This designation by the Americans will have no influence on our monetary policy," Jordan said, referring to the description used by the US Treasury in December.

The SNB spent just over 100 billion Swiss francs ($111.51 billion) on foreign currencies in the first nine months of 2020 to slow the rise of the franc, which was sought by investors seeking safe havens.

"At the moment, these foreign exchange interventions are very important because we have seen great pressure on the franc, especially in the COVID crisis," he said.

He said that Switzerland was in fact "anything but a currency manipulator", pointing to the appreciation of the franc over the last 12 years and low inflation.

Although Jordan said he had not yet spoken with recently appointed US Treasury Secretary Janet Yellen, talks will take place first at a technical and then political level between the two countries to explain Switzerland's position, he added.

While the SNB was not a "big fan" of negative interest rates, there was no alternative because of the policy of low interest rates elsewhere, he said.

If the SNB were to raise its policy rate from the current level of minus 0.75%, the franc would rise massively in value and the Swiss economy would be crippled.

"We have to ... pursue a sensible monetary policy in the overall interest of the country," Jordan said.

"At the moment, unfortunately, that means that these interest rates are very low. As soon as possible, we will raise interest rates."