Switzerland and US agree on no currency manipulation

TDT | Zurich

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Switzerland Switzerland and the United States said yesterday they had agreed that monetary policies should not target exchange rates to gain a competitive advantage.

The joint statement followed the US Treasury adding Switzerland to a watch list in June for countries that manipulate their currencies.

Swiss authorities affirmed in the statement that “monetary policy will remain oriented towards maintaining appropriate monetary conditions to safeguard price stability and will not target exchange rates for competitive purposes”.

The United States made a similar engagement.

Many investors consider the Swiss franc a “safe haven” asset and will buy the currency when they sell off risky assets.

This can cause the value of the franc to rise, creating problems for the Swiss economy as its exports become less competitive while the price of imports falls, prompting the country’s central bank to intervene on the currency markets.

The Swiss National Bank’s purchases of foreign currencies help reduce the market value of the franc.