The Swiss National Bank's foreign-exchange reserves, accumulated on a massive scale since 2012, dipped slightly last month to 693.5 billion Swiss francs ($721 billion), the SNB said Friday. The figures suggest the central bank has pulled back on its currency intervention efforts. It was the second successive month, despite the central bank’s continued complaints about the effects of an “overvalued” franc.
The Swiss National Bank kept interest rates unchanged at record lows, citing the strong currency and an absence of price pressures and the SNB held its deposit rate at -0.75%. It also affirmed its commitment to wage currency market interventions and reiterated that the franc was “significantly overvalued.” Consensus forecasts were for an unchanged policy.
The Swiss National Bank (SNB) will maintain its ultra-loose monetary policy to help rein in the strong franc, Chairman Thomas Jordan Swiss told Italian-language newspaper Corriere del Ticino, published on Thursday. "The overvalued franc, the underutilisation of production capacity and low inflation make it necessary for us to stick to our expansive monetary policy," Jordan said. Jordan said "The franc is still overvalued, which is why negative interest rates and our readiness to intervene in the forex market remain necessary," he explained.
The Swiss National Bank's (SNB) policy of negative interest rates is not ideal but is nevertheless necessary in order to weaken Switzerland's "significantly overvalued" currency, Chairman Thomas Jordan said on the sidelines of the Private Banking Day in Zurich on Thursday. "It's not the case that we find it great to have negative interest rates," Jordan said during conference. However, Jordan said negative interest rates, along with the central bank's willingness to intervene in the currency were absolutely necessary in order to protect exporters from a stronger Swiss franc, which is a safe-haven currency in times of market stress. Those conditions will largely be dictated from abroad, particularly by the European Central Bank (ECB). He stressed Swiss monetary policy was a hostage to weak economic conditions in some EU states, which prompted the ECB to print trillions of euros and move euro interest rates into negative territory.
The Swiss National Bank unveiled the second note in its new banknote series on Wednesday. The new 20 franc note, which will be in circulation from May 17th, follows the release of the first in the series, the 50 franc note, last year. Overall, the National Bank’s new series of banknotes is intended to reflect “the many facets of Switzerland”. The design of each note centers around a primary theme. On the 20-franc note, this will be light. A hand, the earth and butterflies are the main motifs on the note.
Switzerland's central bank posted a profit of 7.9 billion Swiss francs ($7.95 billion) in the first quarter, it said Thursday, boosted by gains from the huge foreign currency reserves built up during its long campaign to weaken the Swiss franc. The Swiss National Bank made a profit of 5.3 billion francs on its foreign currency holdings that rose to 683.18 billion francs at the end of March, a figure larger than Swiss GDP. The bank also made a profit of 2.2 billion francs from a valuation gain on the gold it holds, and 466.4 million francs from negative interest rates it has charged on the sight deposit accounts it holds for commercial banks. The SNB is not required to make a profit, with its main mandate to ensure price stability in Switzerland defined as annual inflation of under 2 percent. But a portion of any profit it does make is distributed to the Swiss government and the country's 26 cantons.
The Swiss National Bank stands ready to defend the franc with interest-rate cuts and market interventions if investors pile into the haven currency in response to the French elections, said SNB President Thomas Jordan said in an interview with Bloomberg Television. “We hope that a reasonable candidate can win, somebody who is in favor of free markets, but we cannot exclude that there will be more pressure on the Swiss franc,” Jordan explained in Washington, on the sidelines of the International Monetary Fund spring meetings. “But as you know we also have our instruments to react to such a situation.”
With the reliability of a finely-tuned watch, the latest release of foreign-currency reserves held at the Swiss National Bank has shown yet another record, in a sign the central bank continues to swim against the tide. The foreign exchange reserves jumped by nearly 15 billion Swiss francs ($14.93 billion) in March. The SNB held 683.181 billion francs worth of foreign currency at the end of March, compared with 668.332 billion francs in February, revised from an originally reported 668.18 billion, preliminary data calculated according to the standards of the International Monetary Fund showed. The franc fell to about 1.07 francs to the euro after the data release, which followed news of U.S. missile strikes against an airbase in Syria that prompted inflows into assets considered safe havens.
Switzerland's central bank bought another 67.1 billion Swiss francs ($67.6 billion) worth of foreign currencies in 2016, almost a quarter less than the previous year, in its effort to fight the appreciation of the safe-haven franc. The sum, published in the central bank’s annual report on Thursday, compares with a 2015 tally of 86.1 billion francs and a record of 188 billion spent in 2012. "These interventions occurred mainly at times of heightened uncertainty, when the Swiss franc was particularly sought after as a safe investment," the Swiss National Bank said in its annual report published on Thursday.
Following its latest quarterly policy meeting, the Swiss National Bank (SNB) made no changes in interest rates and it kept its target range for three-month Swiss franc Libor at -1.25% to -0.25% and the rate it charges on sight deposits at -0.75%. Consensus forecasts were for an unchanged policy, although there had been some speculation that a shift could be sanctioned with a further rate cut. The SNB reiterated that the franc is still significantly overvalued and that it would remain active in the foreign exchange market as necessary.
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