| ZURICH, June 7
ZURICH, June 7 The Swiss National Bank appeared
to dial back its foreign currency interventions in May, analysts
said on Tuesday, as the central bank prepares for increased
market turbulence surrounding Britain's vote on EU membership.
The SNB's currency reserves rose in May by 14.2 billion
francs to 602.063 billion Swiss francs ($622.42 billion) from
587.879 billion francs in April, according to data released on
Despite the rise, the level of SNB currency purchases may
have been lower than in previous months, economists said.
The SNB seemed to have bought foreign currency in the range
of 2 billion to 4 billion francs, said Markus Schmieder, an
economist at Wellershoff & Partners, a Zurich-based consultancy.
He said the majority of the reserve rise was a translation
effect as the franc weakened versus the dollar, which makes up
33 percent of the SNB's foreign currency holdings.
Schmieder estimated the bank had intervened in the range of
5 billion to 7 billion francs in April, and 6 billion to 12
billion francs in March.
He thought the bank had been less active in the markets due
to the franc trading around 1.10 against the euro, a
level the SNB was relative comfortable with at present.
The central bank may also have wanted to keep its options
open for further intervention if necessary in June, with
political uncertainty surrounding the UK's so-called Brexit vote
likely to increase demand for the franc, which is often seen as
a safe haven investment.
The franc hit a five-month high versus the euro on Tuesday,
with some dealers citing speculation of a boost from a Polish
mortgage conversion scheme and pressure on Swiss officials to
The SNB declined to comment on its foreign currency
Other analysts said the increased level of foreign currency
reserves showed the SNB would continue to intervene in the
foreign exchange markets.
Fears that Britons will vote for Brexit on June 23 are
increasing pressure on the pound and the euro, which makes the
franc more attractive, said Laurent Bakhtiari, a market analyst
at IG Bank in Switzerland.
"We think that this turmoil is not over," he said in a
research note. He thought the SNB would do whatever is necessary
to keep the euro-franc exchange rate in the 1.10 to 1.11 range.
The SNB has repeatedly pledged it would be active in the
currency markets to relieve pressure on the franc, which the
central bank stays remains "significantly overvalued" after the
SNB last year removed its ceiling on the franc versus the euro.
The SNB is due to give its next monetary policy assessment
on June 16.
($1 = 0.9673 Swiss francs)
(Editing by Mark Trevelyan)