The Swiss central bank’ foreign- currency reserves rose to a record last month as pressure on the franc ceiling continued.
Holdings increased to 429.3 billion francs ($460.5 billion) at the end of September from 420.8 billion francs in the previous month, the Zurich-based Swiss National Bank said on its website today. The holdings are calculated according to International Monetary Fund standards at the beginning of every month.
SNB President Thomas Jordan has pledged to enforce the franc ceiling of 1.20 per euro introduced in September 2011 “with the utmost determination” as the euro area’s fiscal crisis prompted policy makers to pile up record currency holdings. The franc has weakened 0.9 percent versus the euro since the European Central Bank said on Aug. 2 it will buy government bonds in tandem with Europe’s rescue fund.
The franc traded at 1.21145 versus the euro at 9:28 a.m. in Zurich. It has remained in a range of 1.20 to 1.24 since the cap was imposed, breaching it just once. Against the dollar, the Swiss currency was at 93.17 centimes.
The central bank started piling up foreign-currency holdings in March 2009, when policy makers began their first round of purchases to stem the franc’s ascent. Investors have been seeking the Swiss currency as a haven from the global financial crisis.
Through its purchases, the SNB has boosted liquidity available to the country’s banks and consumers, raising the risk of price increases in the medium and long term. Still, Swiss consumer prices fell from a year ago for a 11th straight month in August and Jordan said on Sept. 25 that “in the foreseeable future, there is no risk of inflation.”
The government is scheduled to publish September consumer prices on Oct. 8.
To contact the editor responsible for this story: Craig Stirling at email@example.com