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Swiss central bank chief rejects US currency manipulator label

Thomas Jordan, President of the Swiss National Bank (SNB), will be suspended at the Swiss International Financial Forum in Bern, Switzerland.

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London — Swiss National Bank President Thomas Jordan rejected the US decision to name Switzerland a “currency manipulator”.

On Wednesday, the US Treasury added Switzerland to the list of countries suspected of deliberately devaluing the US dollar.

Jordan told CNBC Thursday that neither SNB nor Switzerland itself artificially manipulated the value of the Swiss franc.

“Our monetary policy is necessary, it is legal, inflation is very low and even negative at the moment, so we have to fight this deflation. The Swiss franc is so strong that Nominally appreciated. Over the last 12 years, we have achieved tremendous results against both the euro and the US dollar. “

The Swiss National Bank has long argued that it is ready to intervene more strongly in the foreign exchange market and has categorically denied the manipulation of the Swiss franc. The US Treasury said the Swiss intervention accounted for a total of 14% of GDP (gross domestic product).

To be labeled as a manipulator, each country has a bilateral trade surplus of over $ 20 billion with the United States, foreign currency intervention of over 2% of GDP, and a global current account surplus of over 2% of GDP. is needed.

Treasury Secretary Stephen Munuchin said his department has taken a “strong step” to “protect the economic growth and opportunities of American workers and businesses.”

President Joe Biden’s candidate for Treasury Secretary Janet Yellen was able to review the findings when submitting his first currency report scheduled for April.

Jordan said he was looking forward to a “intensive and constructive dialogue” with the Biden team in response to the imminent change of power.

“I will try to explain the specific situation in Switzerland with respect to these standards, and re-explain why these standards do not actually reach the correct conclusions about Switzerland and prove that we are not currency manipulators. I’ll explain, “he added. ..

Earlier Thursday, SNB remained cautious, keeping its monetary policy stance unchanged, keeping interest rates at record lows of -0.75%. The World Bank said the second wave of Covid-19 infections is likely to mean a weakening in the fourth quarter of 2020 and the first quarter of 2021, “factors of production have not been used for some time.” Said.

“Storm in the bowl”

David Oxley, senior European economist at Capital Economics, said in a note Thursday that Switzerland could dial back its intervention in the foreign exchange market next year.

“But this isn’t due to the actions of the US Treasury, but because we expect rising risk sentiment to ease pressure on the euro on the franc,” Oxley said.

“The big picture is that Switzerland has always been treated as a special case when it comes to exchange policy, and even the US Treasury has had a” unique “economic situation in Switzerland in the past, and its monetary policy options are small amounts of domestic assets. stock. “

The next Biden administration was not expected to be hostile in its approach to trade and international affairs, and Oxley suggested that the issue might prove to be a “storm in a bowl.”

Carl Wayneberg, chief economist of high-frequency economics on Thursday, disagreed with the Treasury’s characteristics, suggesting that it could be a moment.

“I certainly don’t understand whether declaring a Swiss as a currency manipulator promotes US interests or does something better for business people. Of course, currency manipulators. Labeling it as a country has no effect. This is what the current Treasury Secretary is doing, and a new Treasury Secretary will be appointed within a few months, “Weinberg told CNBC’s SquawkBox Europe. It was.

He suggested that the next administration would focus more on trying to “make friends around the world, rather than establish hostile relations.”

Swiss central bank chief rejects US currency manipulator label

Source link Swiss central bank chief rejects US currency manipulator label

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