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(Bloomberg) -- Sight deposits at the Swiss National Bank increased nearly 8 percent last week, suggesting the central bank continued to buy foreign currency after it abandoned its cap on the franc.
Sight deposits of domestic banks increased to 365.5 billion francs ($412 billion) in the week ending Jan. 23 from 339.6 billion francs a week earlier, data published on the SNB’s website today showed. The increase is the strongest since July 2013, when the European Central Bank committed to keep interest rates low for an extended period following the U.S. Federal Reserve’s plans to taper bond purchases.
The SNB gave up the cap it had defended for more than three years on Jan. 15 after the prospect of quantitative easing in the euro area increased pressure on the franc. The central bank, which doubled its currency reserves to almost 500 billion francs since the introduction of the ceiling in September 2011, would have had to spend about 100 billion francs in January alone, according to Governing Board member Fritz Zurbruegg.
Today’s figures are “pretty astounding,” said Ursina Kubli, an economist at Bank J. Safra Sarasin Ltd. in Zurich. In response to whether the report meant the SNB had waged interventions last week, she said: “That’s how I read the data.”
SNB spokesman Walter Meier declined to comment.
The SNB said on Jan. 15 it would remain active on foreign- exchange markets to influence monetary conditions. The same day, it announced an increase in the charge on sight deposits to 0.75 percent, which took effect last Thursday when the ECB delivered on a pledge to start large-scale asset purchases to fend off deflation.
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