ZURICH, April 27 (Reuters) - The Swiss National Bank accelerated its foreign-currency purchases last week to counter coronavirus-driven inflows, which are triggering an upward surge in the value of the Swiss franc, data indicated on Monday.
Total sight deposits, the money commercial banks park with the SNB overnight, rose to 650.651 billion Swiss francs ($669.26 billion)from 637.204 billion francs in the previous week.
The 13.4 billion-franc increase was the biggest since the coronavirus crisis began and was the largest increase since January 2015, when the SNB abandoned its currency peg against the euro.
Increases in sight deposits can be a proxy for the SNB’s currency interventions. The central bank declined to comment on Monday.
Last week’s increase came as the franc appreciated to around 1.051 versus the single currency.
Many analysts believe the SNB is trying to prevent the franc going below 1.05 francs to the euro. They do not expect the SNB to change tactics and start countering the appreciation pressure by cutting its policy rate of minus 0.75%, already the world’s lowest interest rate, to deter further inflows.
“Elevated appreciation pressure on the Swiss franc is increasing the risk of a policy rate cut by the SNB. However, it is far from certain that such a rate cut would alleviate appreciation pressure on the francs,” said Maxime Botteron, an economist at Credit Suisse.
“We still don’t expect the SNB to lower its policy rate in our main scenario,” Botteron said. ($1 = 0.9722 Swiss francs) (Reporting by John Revill, editing by Larry King)