Switzerland and the United States said Monday 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 in June to a watch list of 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.
In its June report, the US Treasury took aim at unfair currency practices abroad that it said had contributed to the US trade deficit and “hollowed out” manufacturing employment.
At the end of the firstTrump administration, the US Treasury accused Switzerland of manipulating the franc, but the country was removed from the watch list after Joe Biden took office in 2021.
