Swiss National Bank surprises with forex purchases in Q3

THE Swiss National Bank (SNB) bought 12.8 billion Swiss francs (S$18.7 billion) of foreign currencies during the third quarter of this year, data showed on Thursday (Dec 22), a surprise after the central bank sold 52 billion francs of forex in the first half.

The central bank had been selling foreign currencies to maintain the high nominal value of the franc – an aid in its battle against resurgent inflation.

But the SNB bought 12.8 billion francs of forex between July and the end of September. The net acquisition of foreign reserve assets was reduced to 2.4 billion francs after the SNB sold securities valued at 10.4 billion francs during the period.

“This figure is rather odd,” Karsten Junius, an economist at J.Safra Sarasin, said of the increase. “The SNB has been selling forex in recent quarters and the stronger franc suits its purposes to help battle inflation.”

Junius said he expected the recent trend of forex sales to resume in the fourth quarter.

The SNB, which is due to publish details of its foreign currency interventions next week, declined to comment.

Overall total reserve assets held by the central bank declined to 873 billion francs at the end of September from 920 billion francs at the end of June, mainly due to a fall in the market value of stocks and bonds it holds.

The SNB also published data on Swiss current account, which showed the country’s surplus widening to 24.1 billion Swiss francs (S$35.1 billion) from 21.7 billion francs a year earlier.

The increase, based on a high surplus in the goods trade and a relative low deficit in services trade and primary income, was moderate because it lapped high comparisons with a year earlier, the SNB said. REUTERS