SNB Kept Up Currency Buying Amid Persistent Pressure on Franc

(Bloomberg) -- Sight deposits at the Swiss National Bank ticked higher last week, evidence of officials’ commitment to keep the franc in check in light of increased haven pressure.

The amount of cash commercial banks have parked with Switzerland’s monetary authority increased by 4 billion francs ($4.1 billion) last week to 674 billion francs, data on Monday showed. That’s the smallest nominal rise in a month.

SNB Kept Up Currency Buying Amid Persistent Pressure on Franc

Economists keep a close eye on the SNB’s sight deposit figures to help gauge the scope of its foreign exchange interventions to prevent the franc from strengthening too much. Liquidity operations under the SNB’s Covid-19 facility could also be contributing to the rise in sight deposits.

A spokesman for the central bank declined to comment.

Both SNB President Thomas Jordan and fellow rate setter Andrea Maechler have stressed that the SNB has increased the intensity of interventions in recent weeks.

With the global economy on course for its deepest dive since the Great Depression, pressure on the haven franc has risen considerably, Maechler told daily Neue Zuercher Zeitung in an interview published on Saturday.

Read More: SNB Is Intervening Heavily to Shield Economy, Maechler Tells NZZ

The franc has flirted with the 1.05 per euro mark in recent sessions, prompting speculation whether the SNB, which between 2011 and 2015 capped the franc’s value at 1.20 per euro, might have drawn a line in the sand there.

Maechler denied in the interview that the 1.05 level was becoming something of an informal upper limit. The SNB takes the foreign exchange situation generally into account, she said.

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