The Swiss National Bank (SNB) spent 90 billion francs ($98 billion) on interventions in the first half of 2020, the most in years, amid a market rout in the early days of the coronavirus pandemic.
The SNB was forced to step up its battle against the strong franc as investors drove the haven currency to the strongest level in five years against the euro. The activity means it spent more in just six months than in the previous three years combined.
The new data marks the first time the central bank has published a quarterly figure, and is possibly a bid to deflect criticism of its activities. The US Treasury added Switzerland to its watch list for potential currency manipulators early this year, and encouraged it to publish more data on its transactions.
The franc has depreciated slightly since its high earlier this year. It strengthened a touch against the euro after the data was published and was trading at 1.0811 at 9:08 am in Zurich.
Up to now, the SNB only published an exact intervention tally once a year, though weekly data on sight deposits and a monthly one on foreign exchange reserves provided some clues into its market activity. Those figures suggest it’s eased back in recent months.
The interventions are part of the SNB’s long-running fight against an overvalued currency that’s seen officials try various measures including world’s lowest benchmark interest rate of -0.75%.
SNB President Thomas Jordan affirmed the necessity of an ultra-easy monetary policy stance last week in light of the historic recession caused by the pandemic.
The first-half spending spree coincided with market turmoil in the early days of the pandemic, when global stock markets plunged and central banks were drawn back into a crisis-fighting role.
Economists, including at Goldman Sachs Group Inc., have warned the Swiss National Bank’s massive liquidity injections this year were likely to raise red flags in Washington. The next installment of the US Treasury’s report could be published soon.