SNB Reserves Hit Record in November as Franc Fell Versus Dollar

  • Central bank's foreign currency holdings at CHF562.7b in Nov.
  • SNB Governing Board holds quarterly policy review on Dec. 10

The Swiss National Bank’s holdings of foreign currency soared to an all-time high in November, a month that the franc depreciated roughly 4 percent against the dollar.

The reserves, on which economists keep a close watch for clues to the central bank’s interventions, rose to 562.7 billion francs ($563 billion) last month from a revised 551.5 billion francs in October, according to data published on the institution’s website on Monday.

“The currency swings are affecting the valuation of the reserves,” said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. “In recent weeks we haven’t seen the sight deposits rise much, which is a sign they haven’t or have only very slightly intervened.”

Sight deposits are the cash commercial banks hold with the central bank and serve as a proxy measure for interventions. In the past, such as when the SNB defended the cap of 1.20 per euro it had in place from 2011 to early 2015, the deposits were credited with the amount of francs sold.

Total sight deposits inched down to 467.5 billion francs in the week ending Dec. 4 from 468.4 billion a week earlier, according to a separate SNB data release on Monday. The sight deposits were little changed during the month of November.

Much of the SNB’s foreign exchange holdings have been acquired due to interventions to weaken the franc. In a rare such comment, SNB President Thomas Jordan admitted to having waded into markets to “stabilize” the franc, which investors like to buy at times of heightened market stress, amid the Greek debt crisis last June.

The SNB only publishes a detailed breakdown of how its holdings are invested on a quarterly basis. As of the end of September, the dollar made up 33 percent of those reserves.

The central bank holds its quarterly policy review on Dec. 10, when it’s expected to leave its deposit rate at a record low of minus 0.75 percent.

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