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(Bloomberg) -- Sight deposits at the Swiss National Bank remained virtually unchanged last week, suggesting the central bank limited further foreign-currency purchases after abandoning its cap on the franc.
Sight deposits of domestic banks rose just 0.4 percent to 384.9 billion francs ($417 billion) in the week ending Feb. 6 from 383.3 billion francs a week earlier, data published on the SNB’s website today showed. Sight deposits are cash-like deposits commercial banks hold with the central bank. In the past, when the SNB intervened, the accounts were credited with the amount of francs sold.
“Today’s data suggests that the SNB probably didn’t intervene,” said Maxime Botteron, an economist with Credit Suisse Group AG in Zurich, adding that settlement figures would suggest interventions stopped on Jan. 29. “While the SNB would probably prefer a weaker franc, this indicates that they can live with the franc above parity to the euro and don’t see the necessity to intervene.”
SNB President Thomas Jordan said in a radio interview on Saturday that the SNB would be “active” on the foreign- exchange market should there be a need, reiterating the stance taken by the SNB since it gave up its cap on the franc on Jan. 15.
Last month, the SNB also cut its deposit rate to minus 0.75 percent, and Jordan indicated in the Saturday interview there might be room for another cut.
“There’s clearly a limit to the negative rate -- the question is exactly where it is,” he told Swiss radio SRF. “At the current level of minus 75 basis points, the limit surely isn’t reached.”
Ralf Wiedenmann, an economist at Vontobel Asset Management AG, calculates that the SNB may have injected 57 billion francs via interventions in January.
Because the franc appreciated nearly 16 percent against the euro that month, the SNB’s holdings of foreign currency increased only 0.7 percent to 498.4 billion francs.
Asked whether Switzerland would enact a form of capital controls, Jordan told SRF radio “it’s not a measure that is at the forefront at the moment.”
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