Swiss National Bank cuts euro holdings as it posts rise in profit

 
City A.M. Reporter
THE SWISS National Bank has made a hefty nine-month profit and trimmed euro holdings in favour of dollars and sterling in its huge foreign exchange reserves built up to weaken the franc.

The diversification and profit bolster the SNB’s drive to keep the safe-haven franc capped at 1.20 per euro, a limit set more than a year ago to ward off deflation and recession.

“Today’s policy can be continued, for sure,” Credit Suisse economist yesterday’s data.

SNB reserves this year have risen 70 per cent to SFr429.9bn, equivalent to almost three-quarters of national output, as it bought billions of euros to stop the franc strengthening past 1.20 per euro.

Yet an easing of market tension in the Eurozone in September has seen the franc weaken towards 1.21 per euro, stemming the need for the SNB to intervene and allowing it to diversify out of euros.

Thanks to the weaker franc, the central bank said it recorded a gain of SFr10.3bn on its foreign currency positions for the first nine months, helping it to record a book profit of SFr16.9bn for the period. The SNB also said it cut its holdings of euros to 49 per cent in the third quarter from 60.1 per cent in the second, while its holdings of dollars rose to 27.6 per cent from 21.7 per cent and of pounds sterling to 6.7 per cent from 3.3 per cent.