The Swiss National Bank (SNB) continued its efforts last year to counter the appreciation of the franc against other currencies, but with much less intervention than in 2020.
In 2021, the Swiss issuing institution acquired foreign currencies for a total of 21.1 billion francs ‘in order to counter the upward pressures on the franc and thus contribute to the maintenance of appropriate monetary conditions’, has he indicated on Tuesday in his annual management report.
This is significantly less than the 110 billion spent in 2020, the year in which the coronavirus pandemic had hit the global economy hard. The Swiss currency traditionally plays a role of safe haven and has been popular as such during the coronavirus pandemic.
A franc that is too expensive compared to the main trade currencies, mainly the euro and the dollar, harms Swiss exporters whose prices increase with the appreciation of the Swiss currency.
below parity
Last year, the national currency had eased to 1.11 francs for one euro at the beginning of March, but has since continuously appreciated against the single European currency. With the outbreak of war in Ukraine, the currency pair fell below parity with the euro in early March before easing somewhat.
Interventions on the currency market continued to weigh on the SNB’s balance sheet, which reached 1,057 billion francs at the end of 2021, against 999 billion a year earlier. “Course gains, investment income and currency purchases are the main causes of this increase,” explained the Swiss central bank.
But according to the latter, ‘the expansion of the balance sheet in recent years has caused an accentuation of the risks of losses in absolute terms’. However, the SNB has ‘a solid balance sheet and sufficient capital to be able to absorb even large potential losses’, she added.
/ ATS