Swiss National Bank spent $6 billion on Q1 FX interventions

ZURICH (Reuters) – The Swiss National Bank spent 5.74 billion Swiss francs ($6.01 billion) on foreign currencies during the first quarter of 2022, it said on Thursday, scaling back its operations to curb the safe-haven franc’s strength versus the last quarter of 2021.

The figure was less than the 12.63 billion francs the SNB spent between October and December but more than the 296 million francs it spent during the first quarter of 2021.

The Swiss franc briefly rose above parity versus the euro at the start of 2022 as the reemergence of COVID-19 in China and the war in Ukraine sent investors looking for safe havens.

Foreign currency purchases have been a cornerstone of SNB policy for years to slow the appreciation of the franc, whose high value made life difficult for Swiss exporters by making their products more expensive abroad.

But the SNB this month said the franc, despite its high nominal valuation, was no longer highly valued due to higher inflation in other countries.

The SNB has switched its focus to increasing interest rates, raising its policy rate for the first time in 15 years to fight rising inflation in Switzerland.

On Thursday the euro was trading at around 0.9970 francs.

Analysts have said the SNB seemed to be accepting the franc’s higher value and was holding off from interventions at present.

Still the SNB has warned it could be active in the currency market, saying this month it would intervene to check an “excessive appreciation” of the franc and also consider selling foreign currency if the franc were to weaken.

($1 = 0.9557 Swiss francs)

(Reporting by John Revill, Editing by Michael Shields)