The Swiss National Bank (SNB) reported that total sight deposits on August 1 were CHF 468.5 billion, a drop from CHF 474.7 billion the week before. Domestic sight deposits decreased to CHF 439.5 billion, down from CHF 444.9 billion previously.

July Increase Analysis

This decline comes after a period of growth in July. The reasons for the increase during July were noted earlier. Recent data shows Swiss sight deposits dropped by about CHF 6.2 billion in the week ending August 1, 2025. This suggests the SNB might be pulling back from its recent market activities, reversing the trend seen for most of July. We believe the increase in deposits in July was due to the SNB’s efforts to weaken the Franc. This was likely a proactive move against safe-haven flows, especially as the European Central Bank hinted at possible rate cuts amid slow growth in the Eurozone. Now, the SNB seems to be allowing the Franc to strengthen on its own. This change in strategy may be influenced by stubborn domestic inflation. Recent data from the Federal Statistical Office showed inflation was at 1.8% in July 2025, higher than expected. A stronger Franc makes imports cheaper, a tactic the SNB effectively uses to manage inflation. This gives the central bank a clear reason to let the currency rise.

Potential Market Volatility

We’ve seen this approach from the SNB before, especially from 2022 to 2024. During that time, the bank sold its foreign currency reserves to strengthen the Franc and combat imported inflation. The current drop in sight deposits might mark the start of a similar and more aggressive policy tightening. For derivative traders, this back-and-forth indicates that volatility in pairs like EUR/CHF and USD/CHF is likely to increase. The market now seems unsure of the SNB’s intervention level, creating new opportunities. This environment is well-suited for strategies that benefit from price fluctuations, such as buying straddles or strangles. In the weeks ahead, positioning for a stronger Franc seems smart. One could consider buying EUR/CHF put options to take advantage of a potential drop in the exchange rate. This strategy allows for gains from a strengthening Franc while clearly defining the maximum risk if the SNB changes its approach again. Create your live VT Markets account and start trading now.

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