[ZURICH] Cash held with the Swiss National Bank (SNB) climbed to a record high, data showed on Monday, suggesting the central bank intervened significantly last week to ease pressure on the Swiss franc.
A rise in sight deposits can indicate intervention in foreign currency markets because the SNB buys foreign currencies from banks and then pays francs into their accounts with the central bank.
Last week's 2.7 billion Swiss franc (S$3.81 billion) rise in deposits to 486.4 billion francs, as reported by the SNB, supported expectations that a rising franc, which hit a one month high of 1.0841 per euro on Thursday, could spur the central bank to act.
"It smells like intervention," a trader said. "The SNB is always in the market. But the rise in sight deposits shows it could have been a bit more this time." An SNB spokeswoman declined to comment on the increase.
Credit Suisse economist Maxime Botteron said a nearly 9-billion-franc rise in sights deposits since late February was also a likely sign of interventions. "The most likely reason (for the rise) is that it reflects an increase in foreign-currency asset purchases," Mr Botteron said.
An unspecified amount of currency market interventions is part of the SNB's two-pronged strategy to rein in the franc, whose strength hamstrings the export-led Swiss economy. The SNB is also among a handful of central banks that have introduced negative interest rates.