Swiss National Bank sells the last of its foreign currency purchases

The Swiss National Bank sold 5 million Swiss francs ($5.1 million) worth of foreign currency in market interventions in the second quarter of 2022, ending an era of heavy foreign currency purchases to limit the franc’s gains.

Since removing its minimum exchange rate in 2015, the Swiss National Bank has spent 353 billion francs buying predominantly euros, dollars, and yen to stem the appreciation of the safe-haven currency.

The stoppage of foreign exchange purchases is the second sea-change in the Swiss National Bank policy recently, with the bank also quitting its near eight-year era of negative Interest rates to fight resurgent inflation.

At its peak, the Swiss National Bank spent 112 billion francs to prevent inflows from investors worried by the COVID-19 pandemic sending the franc higher. The figure is greater than the entire economic output of Kenya.

However, since then the central bank has shifted its focus away from the franc towards tackling global and local inflation, which reached a 29-year high in August 2022.

Higher inflation abroad has also reduced the franc’s appreciation impact for Swiss exporters, while the currency’s strength has been a handy weapon against elevated prices from imported products.