LONDON (MarketWatch) -- The Swiss National Bank's currency reserves jumped in April, underlining the scope of the central bank's efforts to restrain the rise of the Swiss franc currency versus a tumbling euro.
SNB reserves rose to 153.6 billion Swiss francs ($133.5 billion) in April, up CHF28.7 billion from CHF124.9 billion, the Swiss Federal Statistics Office said Wednesday, according to Dow Jones Newswires.
The SNB has intervened repeatedly in foreign exchange markets, currency traders say, as it has sought to back up a pledge to prevent excessive appreciation of the Swiss franc versus the euro.
The 16-nation euro zone is Switzerland's largest trade partner. The SNB made its first pledge to stem the Swiss franc's rise versus the euro in the spring of last year, when a round of suspected intervention helped drive the euro back above CHF1.54.
It's been a long slide since then, with the euro testing CHF1.40 in recent sessions before seeing a sharp rebound Wednesday to CHF1.4248.
But the central bank may be reluctant to further increase its exposure given a 170% rise in foreign currency holdings since the beginning of 2009, said Jennifer McKeown, senior European economist at Capital Economics, who expects the euro to fall to CHF1.35 by the end of the year and CHF1.30 by the end of 2011, a 12% depreciation.
"This bodes very will for Swiss exports over half of which are typically destined for the euro zone," she said, in a research note.
Capital Economics expects the Swiss economy to grow by around 1.7% this year, but has revised down its 2011 forecast from 1.5% to 1%. That's double the firm's euro-zone forecast, but lags other fiscally sound economies such as Norway, Sweden and Canada, McKeown said.
William L. Watts is a reporter for MarketWatch in London.
SNB reserves rose to 153.6 billion Swiss francs ($133.5 billion) in April, up CHF28.7 billion from CHF124.9 billion, the Swiss Federal Statistics Office said Wednesday, according to Dow Jones Newswires.
The SNB has intervened repeatedly in foreign exchange markets, currency traders say, as it has sought to back up a pledge to prevent excessive appreciation of the Swiss franc versus the euro.
The 16-nation euro zone is Switzerland's largest trade partner. The SNB made its first pledge to stem the Swiss franc's rise versus the euro in the spring of last year, when a round of suspected intervention helped drive the euro back above CHF1.54.
It's been a long slide since then, with the euro testing CHF1.40 in recent sessions before seeing a sharp rebound Wednesday to CHF1.4248.
But the central bank may be reluctant to further increase its exposure given a 170% rise in foreign currency holdings since the beginning of 2009, said Jennifer McKeown, senior European economist at Capital Economics, who expects the euro to fall to CHF1.35 by the end of the year and CHF1.30 by the end of 2011, a 12% depreciation.
"This bodes very will for Swiss exports over half of which are typically destined for the euro zone," she said, in a research note.
Capital Economics expects the Swiss economy to grow by around 1.7% this year, but has revised down its 2011 forecast from 1.5% to 1%. That's double the firm's euro-zone forecast, but lags other fiscally sound economies such as Norway, Sweden and Canada, McKeown said.
William L. Watts is a reporter for MarketWatch in London.
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