ZURICH (Reuters) - The Swiss National Bank appears to have refrained from currency market intervention of late despite the safe-haven franc’s renewed strength, sight deposit data released on Monday suggest.
Total sight deposits only edged up to 576.63 billion francs in the week ended May 25, from 576.38 billion the week before. A rise in sight deposits can indicate central bank intervention to weaken the franc.
The franc rose to a two-month high against the euro EURCHF= last week as jitters over Italy’s political situation and U.S. tensions with Asia fuelled demand for the currency.
The euro has fallen below 1.16 francs after last month briefly regaining the 1.20 level the SNB had set as a policy floor for three years until abandoning the peg in January 2015.
The SNB has used negative interest rates and willingness to intervene on foreign exchange markets to rein in the franc, whose strength hamstrings the export-led Swiss economy.
SNB officials have repeatedly said it was too early to shift away from their ultra-loose policy stance for fear of undoing years of work to curb the currency’s appreciation, calling the franc still highly valued in fragile markets.
Currency specialist Thomas Stucki at St. Gall Kantonalbank said an “unpleasant summer” was shaping up for the SNB given ructions in euro zone countries.
“It is hard to gauge at what level the SNB will intervene to stop the fall, but it will hardly be active above 1.10 (francs to the euro),” he said.
Reporting by Angelika Gruber Writing by Michael Shields; Editing by Catherine Evans