ZURICH (Reuters) - Switzerland’s foreign exchange reserves hit a record high in January, data showed, suggesting its central bank is still actively curbing the franc with interventions one researcher estimated at close to 2 billion francs per day.
The figures are the first to show changes in the Swiss National Bank’s currency holdings since it surprised financial markets in mid-January by scrapping its more than three-year-old cap of 1.20 francs against the euro.
The SNB later said maintaining that policy would have cost 100 billion francs ($109 billion) to defend in January alone.
But Friday’s reserves data suggested that, even without the cap, the bank spent more than half that sum last month keeping a lid on the franc, according to calculations by Ralf Wiedenmann, head of economic research at Vontobel Asset Management.
A spokesman for the SNB declined to comment on possible currency interventions.
The central bank said it held 498.398 billion francs ($541.5 billion) in foreign currency at the end of January, compared with a revised 495.130 billion francs - the previous record high and equivalent to around three quarters of gross domestic product - at end December.
Equivalent reserves, reported in francs but held in euros and other currencies, would have been worth much less given the franc’s surge since the cap was removed on Jan. 15.
The fact they still ticked up in January suggested the bank was still intervening.
Wiedenmann said that, assuming the franc’s appreciation lowered the relative value of the SNB’s foreign exchange reserves by 10.9 percent by end-January, the bank spent roughly 57 billion francs on interventions during the month.
A weekly rise in the cash commercial banks hold with the central bank is a further sign that the SNB has intervened to weaken the franc since ditching the cap.
Weekly paper Schweiz am Sonntag reported last weekend that the SNB was unofficially targeting an exchange rate of 1.05-1.10 francs per euro, which the SNB had also declined to comment on.
IG Bank analyst Laurent Bakhtiari said on Friday it was difficult to assess what the January foreign exchange reserves level meant without knowing what exchange rate the SNB used in its calculation.
“The numbers ...at the end of February will give us a better idea,” he said.
Reporting By Katharina Bart and Maria Sheahan; Editing by John Stonestreet