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Source: Newsmaker.id
The Swiss franc weakened again against the US dollar in Friday's trading (Sept 18), having faced pressure in recent weeks due to diverging global monetary policy paths. The USD/CHF pair hovered around 0.8240, with the dollar remaining supported after the Federal Reserve maintained a hawkish stance regarding the possibility of further interest rate hikes.
Pressure on the Swiss franc intensified after the Fed raised interest rates by 25 basis points to the 3.75%–4.00% range at its latest meeting. Remarks by Fed Chair Kevin Warsh—emphasizing that inflation remains a challenge—reinforced market expectations that the US central bank could continue tightening policy, thereby boosting the appeal of dollar-denominated assets.
Meanwhile, the Bank of Japan also raised interest rates to a 31-year high; however, the move failed to provide significant support for the Japanese currency, as the market perceived the BoJ as remaining cautious. Policy divergences among major central banks have kept the dollar a preferred choice for investors amidst rising yields on US assets.
Conversely, the Swiss National Bank (SNB) has maintained its benchmark interest rate at 0% and is expected to keep policy loose in the near term. This situation has increasingly made the Swiss franc a funding currency for "carry trade" strategies—where investors borrow low-yield currencies to purchase higher-yielding assets.
Despite the pressure it faces, the Swiss franc retains its role as a safe-haven asset during times of heightened global uncertainty. Developments in the Middle East conflict, energy price movements, and the policy trajectories of global central banks will determine whether investors seek refuge in the Swiss franc or continue to favor the US dollar.
Newsmaker Analysis: Current USD/CHF movements highlight the dominance of interest rate differentials between nations. As long as the Fed maintains a hawkish tone while the SNB remains cautious about raising rates, the dollar is likely to keep the Swiss franc under pressure. However, a shift in global risk sentiment or dollar weakness resulting from a US economic slowdown could once again provide support for the CHF. (arl)
Source: Newsmaker.id