SNB foreign-currency reserves hit record as franc appreciates

[ZURICH] The Swiss National Bank's foreign-currency reserves rose to a record in March as the franc appreciated against the euro.

The central bank's holdings of foreign currency increased to 522.3 billion francs (S$742.67 billion) last month from a revised 509.2 billion in February, according to data published on its website on Tuesday.

The SNB's holdings have served as a gauge for interventions in the past when policy makers sought to defend a ceiling on the franc of 1.20 per euro. While officials gave up that cap in January, they have said repeatedly they're prepared to buy foreign currency if necessary to ensure monetary conditions remain adequate.

"I doubt they intervened - you see the sight deposits have been relatively stable of late," said Maxime Botteron, an economist at Credit Suisse Group AG in Zurich.

"At the end of each quarter, the value of stocks and bonds in the portfolio gets reassessed, which is probably why the holdings have risen." SNB spokesman Walter Meier declined to comment on the increase in the reserves.

With the euro under pressure due to the European Central Bank's quantitative-easing program and investor unease about Greece's finances, the franc gained more than 2 per cent versus the common currency in March, according to data compiled by Bloomberg.

Sight deposits of domestic banks at the SNB have eased from their highs in the weeks just after the central bank replaced its franc cap with a negative deposit rate. They fell to 377.4 billion francs in the week ended April 3, data published on Tuesday showed.

At the end of last year, 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 per cent in equities.

BLOOMBERG