The Swiss franc is set to remain at its current level or weaken further, a survey of analysts by Credit Suisse and the German ZEW economic research institute showed on Wednesday. Switzerland's currency has rocketed in value this year after the Swiss National Bank removed its 1.20 per euro cap in January, raising concerns for the export-reliant economy.
The franc has since pared some gains amid speculation the SNB is intervening in the currency market, and the ZEW study showed 46 percent of respondents expected it to remain near current levels against the euro for the next six months. Some 42 percent of respondents expected the franc to weaken further against the euro, while just 12 percent saw a further strengthening.
"This drift in expectations away from an appreciating franc toward a stable exchange rate or even a depreciating franc may have something to do with indications seen in recent weeks that the SNB has been buying foreign currencies," Credit Suisse said. Echoing other Swiss policymakers, SNB vice-chairman Jean-Pierre Danthine said on Tuesday that the central bank could still expand its balance sheet further by buying euros to weaken the franc.
Data on franc deposits and currency reserves suggest the SNB has been quietly intervening on a small scale. The ZEW's indicator for investor sentiment rose by 23.1 points in May to -0.1 points. This means that indicators for economic activity are currently neutral, though a preliminary reading for first-quarter growth next week should sharpen the picture, Credit Suisse said.
Four months after the SNB ditched the cap, prompting one prominent businessman to warn a "tsunami" would sweep away exports and jobs and plunge Switzerland into deep recession, the economy appears to be holding up better than expected. On Wednesday, however, Swissmem, which represents companies in the machinery, electronic, and metalworking sectors, said nearly one-third of its members forecast an operating loss this year following a 17.1 percent drop in first-quarter orders.
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