Why is the Swiss central bank selling the Swiss franc?
The decision by the SNB to sell their currency is something that has stood out in the global financial crisis. The onset of the financial crisis presented Switzerland with a particular problem as prices started to fall noticeably. This was partly due to a sharp slowdown in growth but the strength of the franc also contributed because it reduced the price of imports. The policy of selling the currency has been successful in one respect. After the SNB first intervened in the foreign exchange market at the end of February, the CHF moved from 1.46 CHF to buy one euro to 1.54 very quickly. In other words, it took more francs to buy a euro. Since then the CHF has not returned to its previous level. It is currently around 1.51. Switzerland, however, is still experiencing deflation. Price changes first turned negative in March and they are now falling by around 1.0% compared with a year earlier.
