SNB’s May Foreign Currency Reserves Advance to Highest in Year

The Swiss National Bank’s foreign currency reserves rose to their highest level in a year last month as the franc depreciated against the dollar and the yen.

The SNB’s foreign currency reserves rose to 444.4 billion francs ($498 billion), a level last seen in May 2013, data published on the Zurich-based central bank’s website today showed. The holdings, calculated according to International Monetary Fund standards at the beginning of each month, stood at 438.9 billion francs in April.

The SNB amassed many of its foreign-exchange reserves through currency-market interventions to defend the ceiling of 1.20 francs per euro set nearly three years ago. An easing of the euro area’s debt crisis has diminished investors’ interest in assets perceived as safe. SNB policy makers have said they have not intervened since September 2012.

The European Central Bank’s unprecedented interest rate cut yesterday didn’t prompt a rise in the franc against the euro, meaning the SNB isn’t under immediate pressure to defend its minimum exchange rate.

“We don’t see interventions,” said Alessandro Bee, strategist at Bank J Safra Sarasin AG in Zurich. “So long as the euro stays reasonably stable versus the franc, the SNB won’t need to do anything.”

The franc fell 1.7 percent against the dollar last month and 2.1 percent versus the yen, while it held steady against the euro.

As of the end of the first quarter, the SNB held 47 percent of its reserves in euros, 27 percent in dollars and 8 percent in yen. The majority of the holdings were invested in highly rated government bonds, with 15 percent in equities.

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