Dear Valued Client,
Greetings from INGOT Brokers.
As a result of the Swiss National Bank’s implied policy concerning the Swiss Franc, an upcoming margin rate increase on USDCHF and CHF pairs will be implemented.
Back in in January 2015, the Swiss National Bank began interfering in currency markets to maintain a formal “peg” of EUR/CHF at 1.20. They had a policy of effectively selling Swiss Francs to buy assets denominated in foreign currencies. The SNB removed the peg in response to sustained capital flows because of market activity, causing a volatility shock that continues to this day.
The Swiss Franc has grown in value in the meantime. Also, there are rumors that the SNB is seeking to keep the EUR/CHF rate above 1.05; this basically means that there is an implied peg at 1.05. The SNB's investment activity lends some credence to this notion.
The Swiss National Bank appeared to act in the currency market to weaken the Swiss Franc, as evidenced by a two-week increase in money held by commercial banks with the institution. A close look of the situation could indicate that the Swiss National Bank's indicated policy is under strain, with current reserves possibly lagging behind those held at the time of the EUR/CHF peg's withdrawal in January 2015.
At the end of July, the SNB's reserves of foreign currency denominated assets surpassed CHF 1 trillion for the first time, compared to less than CHF 600 billion at the time of the January 2015 de-peg event). According to a Financial Times report by Sam Jones, the Swiss National Bank currently owns a portfolio of investments that is greater than most of the world's top sovereign wealth funds.
Starting from the market close of Aug 20, 2021, INGOT Brokers will increase the USDCHF and CHF pair margins to 5% (1:20) until further notice, with the possibility of subsequent increases if considered necessary.
Please make sure you have enough margin to maintain your open trades.
In the event you have any questions, feel free to contact us"
INGOT Brokers Team