SNB Foreign Currency Reserves Fell in June on Bond-Market Rout

The Swiss National Bank’s foreign-currency holdings slipped in June, with a revaluation of bonds probably contributing in a month when the central bank admitted to intervening.

Reserves decreased to 516.2 billion francs ($547 billion) from a revised 517.7 billion francs the previous month, data published on the central bank’s website on Tuesday showed.

Although the holdings are published each month, the SNB revalues the bonds and equities it holds in its foreign-currency portfolio only in the last month of every quarter. A drop in the price of bonds may have offset an increase in foreign currency due to interventions. SNB Spokesman Walter Meier declined to comment on the data.

The Bloomberg Global Developed Sovereign Bond Index lost 5.47 percent in Swiss franc terms in the second quarter. The MSCI World Index declined roughly 4 percent in franc terms during that period.

“I assume the rise in yields is the reason for the slight fall in reserves,” said Credit Suisse Group AG economist Maxime Botteron in Zurich.

Expectations for an increase in reserves were stoked on June 29 when, in an atypical move, SNB President Thomas Jordan said the central bank sold francs to counter a rallying currency after Greek Prime Minister Alexis Tsipras announced a referendum on bailout terms. Greeks voted against the measures on Sunday, throwing into question the country’s place in the euro and raising the prospect of more haven buying and SNB interventions.

With the franc up more than 15 percent since the SNB abolished its 1.20-per-euro cap in January, policy makers have said repeatedly they are prepared to wage interventions if needed. Rarely do they confirm market action, however, and Jordan’s comment last week that the central bank had acted to “stabilize” the currency was unusual.

Euros and dollars are the two biggest components of the SNB’s foreign-currency portfolio. At the end of March, the most recent allocation data available, it had 42 percent of its holdings in euros and 32 percent in dollars. Much is invested in highly rated government bonds, with 18 percent in equities.

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