SNB Foreign-Currency Reserves Increase as Franc Depreciates

The Swiss National Bank’s holdings of foreign currency increased 2.2 percent last month as the franc depreciated against both the euro and the dollar.

The reserves climbed to 509.3 billion francs ($523 billion) in February from a revised 498.5 billion francs a month earlier, data published on the central bank’s website on Friday showed. The holdings are calculated according to International Monetary Fund standards every month.

After intervening heavily at the beginning of the year to defend a cap of 1.20 per euro on the Swiss currency, the SNB gave up the ceiling on Jan. 15. The franc soared against the euro in response, triggering comments from policy makers including SNB President Thomas Jordan that the central bank is prepared to intervene if necessary.

“I don’t think today’s data indicates SNB interventions -- this also is backed by sight deposit numbers,” said Maxime Botteron, an economist at Credit Suisse Group AG in Zurich. “The increase in foreign-currency reserves are more likely to reflect the franc’s depreciation against the euro and the dollar last month.”

The franc fell about 3 percent against the euro in February, 4 percent against the dollar and 2 percent against the yen, according to data compiled by Bloomberg. The Swiss currency traded at 1.07349 per euro at 9:21 a.m. in Zurich, little changed from Thursday.

In a sign the SNB’s probably didn’t intervene extensively in February, sight deposits -- the money commercial banks hold with the central bank -- remained largely unchanged, having surged the month before.

Rate Decision

Maintaining the cap would have cost the SNB 100 billion francs in interventions in January alone, Governing Board Member Fritz Zurbruegg has said. Instead, the central bank cut its deposit rate to minus 0.75 to discourage investors from buying francs.

The SNB holds its next rate decision on March 19 and policy makers will also brief the press that day. Jordan has indicated that there’s room for even lower rates, and economists surveyed by Bloomberg News last month predict officials could loosen policy further if the economy weakens.

As of the end of 2014, the SNB held nearly half its foreign-currency reserves in euros and 29 percent in dollars. Three-quarters were invested in government bonds, with 15 percent in equities.

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