"The latest turbulence in the Eurozone and recent slight appreciation of the Swiss franc has slowed - though not halted - the recovery in Swiss economic activity"
- Credit Suisse
The amount of cash Swiss commercial banks held with nation's central bank turned lower in the week to March 1, raising concerns that investors are getting more anxious over Eurozone's financial woes. Sight deposits of domestic banks dropped to 286 144 million francs last week, down from 288 048 million a week earlier. During the last several months, the amount of currency reserves held by the SNB, stabilised around 427 billion, as the bank decreased its efforts in defending the country's currency from haven flows. Despite the fact that the Swiss Franc trades versus the shared currency around the 1.22 level, the risks for Europe's economy remain too serious to allow the SNB to change its current peg. However, it is expected that soon the Swiss National Bank could lift the floor.
"As a consequence of the realignment of the financial centre and the planned withholding tax, we assume that a total of hundreds of billions of francs will flow out of Switzerland," said Juerg Zeltner, head of UBS wealth management.
"The economic environment worsened again at the end of last year and the growth outlook was lowered," Fritz Zurbrügg told the daily Aargauer Zeitung, adding that exchange-rate risks were still on the cards as a result.
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