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Julius Baer: Swiss franc may fall 4% this year, Japanese yen is not so optimistic

2024-01-30

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"The Swiss franc is overvalued again," said Julius Baer economist David Meier, who expects the Swiss franc to fall about 4% from current levels by the end of the year as the Swiss National Bank withdraws support for the currency. That's more than twice the magnitude of the depreciation estimated by economists on average.

In December, the Swiss National Bank signaled that it might ease, if not completely cancel, its currency selling. Meier expects the SNB to gradually begin cutting interest rates as Swiss inflation moves more steadily below its 2% target later this year, with the country's benchmark rate being the second-lowest among G10 members.

Meier is also less optimistic than others about the outlook for the yen. The yen is expected to appreciate to 140 against the dollar by the end of the year, up 5% from current levels but below consensus expectations of 135. He believes that Japan's weak domestic economy means continued weak domestic inflation pressure, which will ultimately limit the extent to which the Bank of Japan can significantly adjust its monetary policy.

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Julius Baer: Swiss franc may fall 4% this year, Japanese yen is not so optimistic

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