The US Treasury recently added Switzerland to its “monitoring list”. Those on the list are trading partners whose currency practices merit close attention.
The list includes: China, Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Switzerland, and Vietnam.
It is no secret that the Swiss National Bank (SNB) has been actively trying to weaken the Swiss franc.
Switzerland has a large current-account surplus and the SNB has been making big foreign-currency purchases, two hallmarks of currency manipulation.
At the end of September 2019, the SNB had currency positions worth CHF 798 billion on its balance sheet. Much of this will be foreign currency the bank had bought in its attempts to depress the value of the franc.
However, SNB attempts to depress the value of the Swiss franc don’t mean it is undervalued. The currency is among the world’s most overvalued. In December 2019, Credit Suisse estimated the franc was 10% overvalued against the Euro. The bank estimated a fair value of 1.22. On 16 January 2020 it was 1.075.
The US Treasury report concluded that while the currency practices of ten countries were found to require close attention, no major U.S. trading partner at this time met the relevant 1988 or 2015 legislative criteria for currency manipulation.
US Treasury press release (in English)