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Swiss sight deposits surge after SNB abandons franc cap

[ZURICH] The amount of cash commercial banks hold with the Swiss National Bank rose the most since at least March 2013 last week, indicating the central bank may have intervened to keep the franc down despite scrapping a cap against the euro.

Switzerland's central bank shocked financial markets 11 days ago by abandoning a three-year-old cap on the franc, sending the currency soaring against the euro.

Sight deposits surged to 365.486 billion Swiss francs last week, up from 339.614 billion francs in the prior week, data from the SNB showed on Monday.

The SNB can expand sight deposits through foreign exchange swaps and repurchases of its own debt.

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Sight deposits can be an indication of how inclined banks are to find an ultra-safe home for their money. In the past they have been watched by economists for indications the SNB was defending its 1.20 per euro cap, which it abandoned in January.

The SNB is seeking to discourage new flows into Swiss francs by imposing an interest rate of -0.75 per cent on some cash deposits held at the central bank by commercial banks and other financial institutions.

The SNB said earlier this month the negative interest rates, announced in December, have already had an impact on money markets.

A spokesman for the central bank was not immediately available to comment.