EUR/CHF will hover around the 0.95 level for most of next year – ING

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EUR/CHF has seen some sharp losses this week to dip below the 0.95 mark. Economists at ING analyze the pair’s outlook.

Were EUR/CHF to fall too sharply, the SNB would probably flip from being an FX seller to an FX buyer

We do not see the case for a substantially lower EUR/CHF. Yes, the Swiss National Bank (SNB) has been driving it lower through FX sales, yet we argue that the SNB’s desire for a stronger Swiss Franc will wane. This is because the inflation differential to major trading partners is narrowing quickly and means less need for a stronger CHF to keep the real exchange rate stable.

We tend to think EUR/CHF will hover around the 0.95 level for most of next year. Were EUR/CHF to fall too sharply, the SNB would probably flip from being an FX seller to an FX buyer.