The CHF/JPY currency pair edged up on Friday, as the Swiss Franc rose even after the latest inflation figures came in weaker than markets had anticipated, tempering forecasts for tighter policy by the Swiss National Bank.
Annual consumer price inflation in Switzerland held at 0.6% in May. While this print matched the prior reading and represented the highest level since late 2024, it fell short of the 0.8% expected by economists, prompting market participants to reassess the likelihood of a near-term SNB rate hike.
SNB Chairman Martin Schlegel indicated that medium-term inflation dynamics had not materially shifted, even though short-term price pressures have shown some recent increases.
In response, investors have adjusted their expectations and now largely foresee the SNB maintaining its key policy rate at 0% through the end of the year.
Still, the pair’s upside may be limited due to renewed strength in the Japanese Yen amid elevated concerns that authorities could step in to support the currency.
Japan’s Finance Minister Satsuki Katayama said that policy makers remained fully ready to take “appropriate action” in the foreign exchange market if conditions require it.
Signs of potential official activity in currency markets have intensified as market observers focus on a notable decline in Japan’s financial buffers.
Japan’s foreign reserves fell by USD 77.11 billion in May, ending the month at USD 1.31 trillion compared with USD 1.38 trillion previously, reaching their lowest level since July last year.
Within the reserves, foreign currency holdings decreased to USD 1.09 trillion, including USD 931.68 billion in securities and USD 162.24 billion in deposits.
The CHF/JPY currency pair was last up 0.11% on the day to trade at 202.88.
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