SNB Sold Currencies in Final Quarter in Potential Buoy for Franc
(Bloomberg) — The Swiss National Bank sold a small amount of foreign exchange at the end of last year, slightly reducing its balance sheet while risking a strengthening in the franc.
Switzerland’s central bank reduced its foreign currency holdings by 6 million francs ($7.5 million) during the fourth quarter, it said on Tuesday. Based on the institution’s full-year tally, the balance sheet had looked little changed.
The franc surged to decade highs this month as investors sought havens to shelter from the fallout of the Iran war. The SNB signaled heightened resolve to curb excessive gains by intervening.
Such action is intended to ease pressure on the currency, whose strength depresses import costs and thereby inflation. Consumer-price growth slowed to zero in November, the lower bound of the SNB’s target range, meaning that it ended up undershooting the forecast of officials for the fourth quarter.
From October to December, the franc rose slightly against the euro, raising the prospect that the SNB might have resorted to interventions via franc sales. But officials were briefed by staff for the Dec. 11 decision that the currency had depreciated “slightly” on an overall trade-weighted basis since September.
The central bank previously sold foreign exchange from its reserves in 2022 and 2023, boosting the franc and curbing domestic inflation by making imported goods cheaper.
–With assistance from Joel Rinneby.
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