ZURICH (Reuters) - The amount of cash commercial banks hold with the Swiss National Bank crept up slightly last week, adding to signs that the central bank may have intervened to weaken the franc since removing the currency’s cap last month.
The SNB on Jan. 15 scrapped the 1.20-per-euro cap it imposed on the Swiss franc in September 2011, surprising financial markets. Maintaining the policy would have cost the bank 100 billion francs ($108 billion) in January alone, the SNB later said.
The move sent the safe-haven franc soaring against the euro, though the single currency has regained some ground amid speculation that the SNB is intervening in the market.
In the week ending Feb. 6, sight deposits rose to 384.889 billion francs, SNB data showed on Monday, from 383.325 billion the previous week.
An SNB spokeswoman declined to comment on Monday when asked whether the central bank had intervened.
Sight deposits - which can be freely transferred or converted into cash - measure the amount of money commercial banks hold with the SNB. The SNB can expand such deposits through foreign exchange swaps and repurchases of its own debt.
“I think they (the SNB) are intervening, and they haven’t tried to pretend that they’re not,” said Jane Foley, a senior FX strategist at Rabobank in London.
“But what we saw last week was euro/dollar off its lows, and I think that relieved some of the pressure for the Swiss and the other European central bankers too.”
SNB Chairman Thomas Jordan said in an interview broadcast on Saturday that the bank is prepared to intervene in foreign exchange markets and has room to push interest rates further into negative territory, if necessary, to weaken the franc.
Jordan declined to say whether the SNB had intervened recently, though data last week showing Switzerland’s foreign exchange reserves hit a record high in January also pointed to interventions.
The SNB has attempted to discourage new flows into francs - viewed as an ultra-safe investment - by imposing an interest rate of -0.75 percent on some cash deposits.
Reporting by Alice Baghdjian and Joshua Franklin in Zurich and Jemima Kelly in London; Editing by John Stonestreet and Susan Fenton