- Alexander Koch, an economist at UniCredit Group
The Swiss National Bank's foreign-currency reserves soared to a record high in May, after being almost stable for almost eight months, as the Swiss Franc lost ground against the Euro and U.S. Dollar. The report showed that holdings, which are calculated according to IMF standards, jumped to 441.4 billion francs up from a revised 436.1 billion francs in April. Reserves edged higher, boosted by valuation effects and not by new purchases. At the end of the first quarter the SNB help 48% of its reserves in single currency, 27% in U.S. Dollars and only 9% in Japanese Yen.
Seeking to avoid the deflation and overvaluation of the nation's currency, the SNB imposed a cap on the Swiss Franc versus the Euro on September 2011 after investors looking for a safe haven from the Eurozone sovereign debt crisis had pushed the Swiss currency from one record high to another. In the meantime, the fact that the Franc depreciated 1.3% versus the Euro in May, breaking through the 1.26 mark for the first time in more than two years, while versus the greenback the Swiss currency dropped 2.5%. The latest devaluation of Franc is raising speculation about the possible increase of the minimum exchange rate and even implementation of negative interest rates, easing pressure on the SNB.
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