SNB Boosts Currency Holdings to 12-Year High to Weaken Franc

By Simone Meier and Klaus Wille

July 21 (Bloomberg) -- The Swiss central bank raised its foreign currency holdings in the second quarter to the highest in at least 12 years to weaken the franc.

Currency holdings rose 46 percent to 81.7 billion Swiss francs ($76 billion) from 55.8 billion francs at the end of the first quarter, the Swiss National Bank said today on its Web site. That’s the highest since at least 1997. Dollar holdings rose to $19.9 billion from $13.2 billion and euro investments surged to 32 billion ($45 billion) from 20.3 billion.

The SNB in March started buying foreign currencies after an appreciating franc eroded exports and threatened to push the economy into deflation. The Zurich-based bank said last month that it will continue to take “firm action” to prevent any further gains in the Swiss currency to bolster the economy.

The SNB’s holdings of British pounds rose to 2.97 billion ($4.9 billion) from 2.93 billion in the first quarter, today’s report showed. Yen reserves increased to 426.7 billion ($4.5 billion) from 373.9 billion.

To contact the reporters on this story: Klaus Wille in Zurich at kwille@bloomberg.net; Simone Meier at smeier@bloomberg.net.