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2025-08-01 16:34:50
[Foreign Exchange Market Turmoil: Multiple Central Banks Intensify Intervention, Hidden Signs Behind the Swiss Franc's Strength!] ⑴ As many countries attempt to influence their currencies in response to the trade war, the influence of foreign exchange market intervention is growing. ⑵ Following the escalation of the trade war in April, the US dollar was sold off, but subsequently rebounded as traders covered their short positions. ⑶ As a result, the Japanese yen and some emerging market currencies plummeted, while the Swiss franc continued to strengthen. ⑷ Japan's Finance Minister expressed alarm at the yen's performance. Markets widely believe that the Reserve Bank of India has begun intervention, while a sharp increase in Swiss deposits suggests that the Swiss National Bank is intervening heavily to prevent the Swiss franc's appreciation. ⑸ The Reserve Bank of India's selling of US dollars could lead to buying of the US dollar against major currencies such as the euro, yen, and pound. ⑹ The Swiss National Bank's interventions are often substantial, and its foreign exchange reserves are primarily composed of US dollars and euros. These flows could dampen EUR/USD volatility and provide support for the euro before rebalancing flows put pressure on it. 7. The scale of the Bank of Japan's intervention could also be very large, but its effectiveness would be greatly reduced as traders unwind their long yen bets. 8. Any intervention measures are likely to be delayed until the yen's decline extends further, which suggests that future foreign exchange market volatility will further increase.
