Thursday, April 30, 2015

Exchange rates: Swiss National Bank losing 30 billion euros – Tagesspiegel

12:33 clock

30 billion loss in the first quarter – it is on paper. The Swiss National Bank SNB had to concede in the first quarter the biggest loss in its history. Guilt is the expensive franc. And the monetary authorities themselves.

The radical change of course with the decoupling of the franc by the euro, the Swiss central bank eingebrockt the biggest quarterly loss in its history. The huge foreign currency reserves ensured in the first three months for a net loss of CHF 30 billion, as the Swiss National Bank (SNB) announced on Thursday. The monetary authorities had long guaranteed a minimum exchange rate of the franc against the euro. When this was withdrawn in mid-January, the franc appreciated massively.

gold holdings now a billion worth less

According to the SNB suffered foreign exchange losses totaling 41.1 billion francs on its investments held in other currencies.
The gold reserves of the central bank are now a billion francs worth less. Capital gains on equities and bonds, however dampened the negative impact of currencies and the precious metal on the result. The penalty interest on deposits of commercial banks at the SNB rinsed 236 million Swiss francs in cash. The SNB stands up with these negative interest against the massive financial flows into the franc and the harmful for the export-oriented industry appreciation of the currency. Deposits with the Central Bank are currently charged with a fee of 0.75 percent.
The SNB’s foreign exchange reserves in the amount of 532 billion Swiss francs were invested in late March to 42 percent in euros, 32 percent went to the dollar. The result of the central bank is largely dependent on developments in the gold, foreign exchange and capital markets and exposed to traditionally strong fluctuations. Conclusions of each quarter on the annual results are limited.
2014 SNB had retracted a profit of 38 billion Swiss francs.

departure from the minimum euro exchange rate still properly

The huge quarterly loss leads clearly before our eyes, received what risk the SNB would, they would have longer held at the minimum euro exchange rate of 1.20 Swiss francs, exchange expert explained Peter Rosenstreich from broker Swissquote. “Even if it is unpopular to say so. The blunt object the lower limit was the right strategy” Currently 1.05 francs to be paid for one euro. In the past week, the single currency was sacked just over 1.02 francs in the wake of the Greek Debt dispute even up on courses.
The ability of the SNB to counter a renewed franc appreciation over verbal interventions, Rosenstreich skeptical. Following the publication of today the cost of a direct intervention were easily estimate the foreign exchange market, and the effect of negative interest rates is limited. Speculation that the Fed try with euro purchases to weaken the franc, come on over and over again. Fed Chairman Thomas Jordan and his two fellow Board have repeatedly said that they want to intervene even after the departure from the more than three years in force Euro-rate floor, if again should roll a wave of money to Switzerland. (Reuters)


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