-Michael Sneyd, a strategist at BNP Paribas
Switzerland's foreign currency reserves rose to a record high in February, but the increase was likely to be caused by a decline in the Swiss Franc rather than by the Swiss National Bank's foreign currency buying. The reserves advanced 2.2% to 509.3 billion francs ($523 billion) in February from a revised 498.5 billion francs in the previous month. While some analysts speculated that the central bank continued buying money to curb the Swiss Franc, others believed the 11-billion franc rise in reserves was likely boosted by a slight decline in the Franc. The SNB, however, did not comment on whether it had made fresh foreign currency purchases in February. Since the end of January Switzerland's currency has lost around 2% versus the Euro but the Franc is still more than 10% stronger than before the currency's ceiling removal.Back in January the SNB shocked investors with its decision to abandon its three-year-old peg of 1.20 per euro, a move that had catastrophic and devastating effect on many traders, funds and investors.
A separate report showed growth of consumer prices in the Alpine country slowed its pace in February. The cost of living in Switzerland declined an annual 0.8% in the reported month, following the 0.5% drop in January. Measured on a monthly basis, the Consumer Price Index came in at negative 0.3% in the measured month.
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