The Swiss Central Bank announced on Tuesday that it is on track to achieve record annual results in 2017, citing gains in its foreign currency savings.
The Swiss National Bank expected to achieve profits of 54 billion Swiss francs ($2.55 billion) for the year 2017, more than double the profits it achieved in 2016, which amounted to 24.5 billion.
The strong increase is mainly due to the weakness of the franc, which lost nearly 10 percent of its value against the euro last year. This, in turn, led to an increase in the value of the bank’s foreign currency savings. The value of the bank’s assets reached 784 billion francs by the end of last November, representing about 94 percent of the bank’s budget.
In the past, the Swiss Central Bank has purchased large amounts of euros to prevent the Swiss franc from rising unduly in value. A strong Swiss franc is generally considered harmful to Switzerland’s exports, as it makes Swiss products more expensive and less competitive globally. Consequently, Swiss consumers tend to shop abroad rather than domestically.
On March 5, the Swiss Central Bank is scheduled to publish its final revenue statistics. This announcement is important to understand the impact of the bank’s previous purchasing operations and to analyze their final results. These statistics may be an indication of future interventions that the Swiss Central Bank could take to maintain the stability of the value of the Swiss franc and promote economic growth in the country. It is noted that these points are based on information until September 2021, and there may be important new developments that take place after then. It affects the topic directly.
The Swiss Central Bank’s decisions regarding the Swiss franc in the future
There are several key factors that could influence the SNB’s decisions on the Swiss franc in the near future. Among these factors:
Inflation: Inflation is one of the main factors that influence the decisions of the Swiss Central Bank. If inflation rates increase significantly, the bank may take action to raise the value of the Swiss franc to reduce inflation.
Economic Growth: The Swiss Central Bank’s decision is affected by the country’s economic growth rate. If there are expectations of strong economic growth, the Bank may take action to limit the strength of the Swiss franc to enhance the competitiveness of Swiss exports.
Global geopolitical and economic tensions: Global geopolitical and economic tensions can influence the decisions of the Swiss Central Bank. In the event of global events such as changes in the monetary policy of other central banks or trade conflicts, the Bank may take measures to deal with their effects on the Swiss franc.
The vision of the Swiss Central Bank: The vision and objectives of the Swiss Central Bank are an important factor in determining its decisions regarding the Swiss franc. These objectives could include maintaining financial stability, economic growth and enhancing the competitiveness of Swiss exports.
The SNB also needs to consider economic and financial forecasts, analysis and other key indicators to make its decisions on the Swiss franc. These factors must be monitored and taken into account to understand the likely path of the SNB’s monetary policy in the near future.
Economic Growth: There were expectations that the Swiss economy would see moderate growth in the near future, as the global economy continues to recover. However, the outlook may be affected by factors such as global trade tensions and the monetary policies of other central banks.
The Swiss franc and its impact on the Swiss economy and international trade relations
The Swiss franc is the official currency of Switzerland and has a major influence on the Swiss economy and international trade relations. Here are some ways the Swiss franc affects:
Foreign Trade: The strength or weakness of the Swiss franc affects Switzerland’s trade with other countries. If the Swiss franc is strong, this makes Swiss products more expensive on the global market, negatively affecting their exports. On the other hand, if the Swiss franc is weak, this could enhance the competitiveness of Swiss products at the global level.
Tourism: Switzerland is a popular tourist destination, and the tourism sector is affected by changes in the value of the Swiss franc. If the Swiss franc is strong, tourists will find it difficult to afford accommodation and shopping in Switzerland, which could lead to a decline in tourism. On the other hand, if the Swiss franc is weak, this could attract more tourists to Switzerland.
Foreign direct investment: The Swiss franc can influence the decisions of foreign companies to invest in Switzerland. If the Swiss franc is strong, foreign companies may find it difficult to invest capital in Switzerland, while if the Swiss franc is weak, this could encourage foreign companies to invest more in Switzerland.
As for the unemployment rate in Switzerland, the Swiss franc can affect it indirectly. For example, if the Swiss franc is strong and Swiss exports are negatively affected, this could cause economic activity to decline and employment to decline, leading to an increase in the unemployment rate. The opposite is also true, if the Swiss franc is weak and exports and economic activity improve, this could lead to a lower unemployment rate.
