Swiss Franc Weakens Against Euro Amid SNB's Less Hawkish Stance

The Swiss franc has been weakening against the euro this year, with EUR/CHF rising back above 0.9300 for the first time in 2023.

This marks a contrast to last year's energy shock triggered by Russia's invasion of Ukraine, when the CHF was one of the best-performing G10 currencies alongside the USD.

The Swiss National Bank (SNB) has been less willing to tolerate a stronger currency this time around, with policymakers seeing 'no immediate need for action' in June, but acknowledging increased inflation risks.

Oil prices have risen by more than 20% since then, adding to upside inflation risks and increasing the likelihood that the SNB may need to reconsider its policy stance if higher energy prices prove persistent.