Photographer: Alessandro Della Bella/Bloomberg

SNB Can Sleep Through Brexit Vote as Asia Outpost Sweats

  • First counts in EU vote expected for early hours of June 24
  • SNB opened Singapore office in 2013 when cap was in place

The Swiss National Bank’s decision three years ago to open a branch in Singapore will pay off with a good night’s sleep this month when the results of the U.K.’s European Union referendum begin to hit the wires after midnight.

With the June 23 vote too close to call and currency markets volatile, the outcome may prove to be an ordeal for the SNB. The franc, already described as “overvalued” by President Thomas Jordan, is popular at times of uncertainty, and investors looking to latch on for safety could push it higher.

The central bank’s eight-member Singapore office, opened in 2013 to allow round-the-clock foreign-exchange operations, means Zurich-based staff won’t have to stay up all night like bankers at institutions including JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and Morgan Stanley. Currency interventions are part of the SNB’s dual-pillar policy.

Ballots will close at 10 p.m. in London. No official exit poll is being conducted for release once voting ends, and it’s unclear how soon results will show a clear trend. The first tallies are due soon after midnight on June 24, with the final outcome expected much later in the morning. Zurich is one hour ahead of London, while for Singapore, the time difference is 7 hours.

While the franc has been weaker than 1.08 per euro since the start of the year, its appeal as a haven may reawaken if the U.K. opts to leave the EU. That could push the SNB to intervene, something it hasn’t admitted to doing since June of last year. The euro-franc currency pair is primarily traded during European business hours, though the EU referendum might prompt market participants to break with normal schedules. The franc traded at 1.08866 per euro at 2:16 p.m. in Zurich on Friday.

“There will be trading from the get-go,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “The fear bet is on the Leave side, so if it’s a Remain vote, you could see volatility a bit more muted than in the exit scenario, but for sure we’ll be seeing big swings. ”

The SNB declined to comment on what it plans to do in response to any fallout from a so-called Brexit.

The Singapore branch was opened when the SNB still had its franc cap of 1.20 per euro in place, even though that year it wasn’t forced to intervene to weaken the currency. The policy was scrapped in early 2015 and replaced by negative interest rates and a pledge to intervene in foreign-exchange markets.

It’s not uncommon for central banks to have overseas branches, but for those offices to take an active part in implementing policy is rarer. The European Central Bank doesn’t have any trading desks outside of the region, while Germany’s Bundesbank has operations in Tokyo and New York, where the Bank of France also has an office.

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