SEB: the franc will continue to decline, but without haste

The Swiss currency has appreciably fallen in price over the last couple of months, falling to the lowest levels since January 2015, while the dynamics of the franc indicate a noticeable change in the mood of market participants and gives reason to think that the downward movement will continue. This view is shared by SEB strategists, who pay attention to the fact that the franc loses its attractiveness as an “active refuge” amid growing hopes for curtailing stimulus measures in the euro area and the constant soft position of the Swiss National Bank. At the same time, the SEB warns that the sharp decline in the franc should not be expected: the valuation models indicate that the Swiss currency is close to fair, the current account surplus remains steadily high, and the decline in demand for currency from foreign investors can be compensated by a contraction reserves of SNB. SEB adheres to the forecast for EURCHF at the end of the year at the level of 1.16.

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