Daily Management Review

Swiss Central Bank shows record loss in Q1


The Swiss Central Bank (SNB) recorded the maximum quarterly loss since its foundation in 1907 amid the collapse of global financial markets in connection with the pandemic of the coronavirus infection COVID-19.

The value of the SNB portfolio last quarter fell by 38.2 billion Swiss francs ($ 39 billion). The value of foreign currency assets in the SNB portfolio in January-March fell by 41.2 billion francs.

The losses of the Swiss Central Bank somewhat offset the income from investments in gold, amounting to 2.8 billion francs due to the jump in the price of precious metals in a panic in the markets. Swiss franc SNB assets value was up to 300 million

"The losses of the Central Bank of Switzerland were not unexpected, given the significant dependence of its portfolio on global markets," said Maxime Botteron, economist at Credit Suisse.

According to expert estimates, in March SNB spent 27 billion francs on the purchase of foreign currency - this is the maximum since January 2015. Then the Central Bank was forced to resort to powerful interventions in the foreign exchange market in order to restrain the strengthening of the franc after canceling the ceiling of the franc against the euro.

This year, the franc is steadily strengthening, despite the ongoing SNB interventions, due to the huge demand for the assets of the "safe haven", which include the Swiss national currency, in a crisis.

According to Botteron, the Central Bank spent an amount equivalent to approximately 5.6% of GDP on foreign exchange interventions in January-March.

Currently, the euro is at 1.0526 Swiss francs. Since the beginning of this year, the franc has risen in price by more than 3%.

source: ft.com