"In my opinion the euro-swiss cap at 1.20 is useless already today and SNB will leave as a future backstop"
- Attilio Bertini, head of research at Credito Valtellinese
During December the EUR/CHF currency couple was highly volatile, first depreciating from 1.2325 to 1.2166 and then rocketing above previous highs. Therefore, the possibility SNB's foreign currency reserves will change over the last month of 2013 a lot was low. The Zurich-based central bank's holdings stood at 435.19 billion francs in December, down from a revised of 435.85 billion francs a month earlier. Analysts, expected a slightly steeper decline to 435 billion francs. The data came as the bank has lost around 15 billion francs on its gold holdings, as the bullion posted its worst yearly decline in more than a decade. Nonetheless, some of the SNB's holdings have compensated the loss.
The Francs is still popular among investors as they consider it as a haven at times of heightened market stress. However, amid improvement in the Eurozone, the pressure on the Franc eased, and the SNB has not intervened the financial markets since September 2012. After hitting an all-time high of 444 billion francs in May, reserves has stabilised around the current level.
The SNB expects a 9 billion loss for the last year, a because of this loss the central bank will not have to pay its customary payment to the Swiss government. In November, a poll conducted by Bloomberg showed that 64% of economists expect the Swiss National Bank to remove the cap after the first quarter of 2015.
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