ZURICH (Reuters) - The amount of cash commercial banks hold with the Swiss National Bank (SNB) rose further last week, adding to signs that the central bank has intervened to weaken the franc since ditching the currency's cap against the euro.
The central bank shocked financial markets last month by scrapping the more-than three-year-old cap, a policy it later said would have cost 100 billion francs (72 billion pounds) to defend in January alone.
In the week through Jan. 30, sight deposits jumped to 383.325 billion Swiss francs, SNB data showed on Monday, after surging the most since at least March 2013 the previous week to 365.486 billion.
The SNB can expand such deposits through foreign exchange swaps and repurchases of its own debt.
"As those volumes are substantial in historical comparison, it remains to be seen for how long the SNB will be willing to buy foreign currencies," Credit Suisse analyst Maxime Botteron wrote in a note.
Weekly paper Schweiz am Sonntag reported over the weekend that the SNB was unofficially targeting an exchange rate of 1.05-1.10 francs per euro. The abandoned cap was set at 1.20.
Citing unnamed sources close to the bank, the paper said the SNB, which declined to comment on the report, was operating "a kind of minimum exchange rate against the euro".
"In our view, however, the SNB is not only focusing on euro-franc, but also on other currencies such as the U.S. dollar and possibly Asian currencies," Credit Suisse's Botteron said.
The franc hit a two-week low against the euro and the dollar on Monday.
Sight deposits also illustrate how inclined banks are to find an ultra-safe home for their money. The SNB has attempted to discourage new flows into francs by imposing an interest rate of -0.75 percent on some cash deposits.
A spokesman for the SNB also declined to comment on the rise in sight deposits.
Reporting by Maria Sheahan; editing by John Stonestreet