EUR/CHF to trade around parity for an extended period, USD/CHF to drop below 0.90 – Barclays

Economists at Barclays expect the Swiss Franc to remain resilient. They see the EUR/CHF pair hovering around parity for an extended period.

Recent banking sector stress unlikely to dent Franc strength or undermine its “safe haven” status

“We expect the Swiss Franc to remain resilient, supported by the SNB’s strategy to use currency strength as a lever against inflation. This strategy is implemented via further policy rate hikes and FX intervention, which should keep EUR/CHF around parity for an extended period. In a recovering EUR environment, this implies additional strength versus the Dollar (to below 0.90 in USD/CHF).”

“We do not expect the recent banking sector stress to dent Franc strength or undermine its status as one of the world’s ‘safe haven’ currencies. Such an outcome would require radical shifts in Switzerland’s balance sheet via ‘safe asset’ outflows, which we deem very unlikely.”