7 Jan 2015
Maybe the SNB is the only real buyer of the euro – BBH
FXStreet (Barcelona) - Mark Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, notes that today's data from the SNB confirms markets' suspicion that SNB did intervene last month to defend its cap against the euro, with its reserves rising to CHF495.1bln from previous CHF 462.7bln.
Key Quotes
“Data from the Swiss National Bank today confirms what the market has suspected. It intervened in size to defend its cap against the euro last month. The details are not yet available, but on an IMF reporting basis, the SNB said that its reserves rose to CHF495.1 bln (~$490.2 bln) from CHF462.7 bln in November.“
“There are two components to the CHF32.4 bln increase in Swiss reserves, which represents a 7% increase from the November. The first is a change in valuation caused simply by the change in exchange rates.”
“It is difficult to determine precisely how much of the change in the value of the holdings was a result of changing exchange rates. The preliminary data does not provide a breakdown of the currency allocation of Swiss reserves.”
“The euro buying by the SNB stands in stark contrast to other central banks, which are believed to be continuing to sell euros after they reduced their holdings in Q3, according to IMF COFER data released at the end of last year.”
“The depreciating currency and low rates may be encouraging official asset managers the same as it is encouraging private investors to reduce euro exposure.”
Key Quotes
“Data from the Swiss National Bank today confirms what the market has suspected. It intervened in size to defend its cap against the euro last month. The details are not yet available, but on an IMF reporting basis, the SNB said that its reserves rose to CHF495.1 bln (~$490.2 bln) from CHF462.7 bln in November.“
“There are two components to the CHF32.4 bln increase in Swiss reserves, which represents a 7% increase from the November. The first is a change in valuation caused simply by the change in exchange rates.”
“It is difficult to determine precisely how much of the change in the value of the holdings was a result of changing exchange rates. The preliminary data does not provide a breakdown of the currency allocation of Swiss reserves.”
“The euro buying by the SNB stands in stark contrast to other central banks, which are believed to be continuing to sell euros after they reduced their holdings in Q3, according to IMF COFER data released at the end of last year.”
“The depreciating currency and low rates may be encouraging official asset managers the same as it is encouraging private investors to reduce euro exposure.”