Switzerland’s central bank sold 5 million Swiss Francs worth of foreign currency during Q2 in market interventions, according to data published on Friday.

The move highlights the Swiss National Bank’s (SNB) shift away from battling the strength of the currency to combatting inflation.

The SNB had purchased 5.4 billion Francs worth of foreign currencies in the second quarter of last year, along with 5.7 billion Francs worth in the first quarter of this year.

The purchase of foreign currencies with newly created Francs was the basis of the central bank’s policy for seven years, as it fought to curb the safe haven currency’s appreciation.

The Swiss National Bank feared a robust increase in the Franc would hamper the country’s export-orientated economy and lead to a deflation risk, Reuters reports. 

That said, Swiss inflation has increased, fuelled by supply problems and mounting food and energy prices, reaching 3.5% last month, a 29-year high.

Yet, governing board member of the central bank, Andrea Maechler said earlier this week that the Swiss Franc was helping to restrain imported inflation.

"The National Bank has said it decided at the end of 2021 to allow the Franc to appreciate, but I think the conviction for this increased rapidly in 2022 as inflation figures continued to rise," said Elias Hafner, Zuercher Kantonalbank foreign exchange strategist.

“The goal of the SNB is to control inflation, and a strong Franc helps."

EFG Bank economist, GianLuigi Mandruzzato, said he forecasts the SNB to not make any major interventions for the remainder of the year or 2023 to weaken the Franc, unless there was a large, fast appreciation in the currency.

"A level of 0.90 Swiss cents versus the Euro could be a pain threshold, but only if it happened in a few days. If it happened by the middle of next year, I don't think it would be an issue for the SNB," he said.