CHF Pressure Continues as Carry Trade Funding Demand Grows

The Swiss Franc (CHF) remains under pressure due to carry trade funding demand growth and recent Japanese Yen (JPY) intervention. According to OCBC's Sim Moh Siong and Christopher Wong, CHF is being used as a preferred funding currency by the market. This trend has reinforced the SNB's comfort with a weaker currency.

Inflation remains subdued in Switzerland, below the midpoint of the 0-2% price stability range set by the SNB. As a result, policy rates are likely to remain at zero for the rest of this year and potentially until end-2027.