The Swiss National Bank (SNB) probably intervened in the currency market last week against the appreciation of the Swiss franc.
This is indicated by the renewed sharp increase in sight deposits at the SNB.
Federal and bank deposits rose by CHF 6.7 billion to CHF 627.2 billion within a week, as the SNB announced on Monday. This is, after all, a little less than in the previous week, when the SNB sight deposits had increased by around 11.7 billion, which is the highest level since the minimum euro exchange rate was lifted in early 2015. Over the past four weeks, sight deposits have increased by around CHF 30 billion. That is more than twice as much as last year together.
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In mid-March, on the occasion of its quarterly monetary policy assessment, the SNB announced that it wanted to intervene more in the foreign exchange market due to the recent appreciation of the Swiss franc in connection with the Corona crisis. The SNB buys foreign currencies in its foreign exchange interventions and credits the Swiss franc amount to the banks’ SNB accounts. Therefore, sight deposits are a good indicator of interventions.
The Swiss franc is considered a safe haven among investors – such as the Japanese yen – and has gained in value in the wake of the turmoil on the financial markets and recession concerns. This can be seen well in the exchange rate development against the euro. After the European common currency had cost around CHF 1.10 at the beginning of the year, the exchange rate was CHF 1.0550.
Refinancing emergency loans
According to experts, the current sharp rise in sight deposits is not only the result of interventions by the SNB on the foreign exchange markets, but also the granting of corona loans to companies suffering from the corona crisis. As is well known, the banks have been providing Covid 19 loans to SMEs for which the federal government has guaranteed for almost two weeks. Banks can refinance with the SNB to grant the loans.
According to the State Secretariat for Economic Affairs (Seco), a total of 76,034 Covid-19 loans with a volume of around CHF 14.3 billion were granted as of last Thursday. So that the money does not run out, the Federal Council even doubled the commitment loan on Friday to CHF 40 billion.
mk / uh
Zurich (awp)
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