ZURICH, May 4 (Reuters) - The Swiss National Bank maintained currency interventions at a high level last week as it fought to contain the most recent surge in the value of the safe-haven Swiss franc, data indicated on Monday.
Total sight deposits — money which commercial banks park with the SNB overnight — rose to 663.771 billion Swiss francs ($688.63 billion) from 650.651 billion francs in the previous week.
The 13.1 billion franc increase was slightly less than the 13.4 billion rise the week before, but was still the second-highest weekly jump in nearly 5-1/2 years.
A rise in sight deposits can indicate foreign exchange purchases. The SNB declined to comment.
Sight deposits have risen by nearly 77 billion francs this year, suggesting far greater foreign currency purchases by the SNB, which spent 13.2 billion francs on this in 2019 and 2.3 billion francs in 2018.
Analysts said last week’s rise showed the central bank has most likely been intervening, particularly around April 23 and 24 when the franc increased in value to nearly 1.05 versus the euro.
“The fact the currency weakened slightly afterwards will have given the SNB some relief,” said Credit Suisse economist Maxime Botteron.
Botteron said he did not think much of the increase was down to the SNB supporting the liquidity of commercial banks under a COVID-19 refinancing facility, or the SNB managing the overnight interbank SARON rate through repurchase orders.
Large-scale interventions were likely to remain the SNB’s main tool to restrict the franc’s appreciation, Botteron added, rather than cutting its policy rate of minus 0.75%.
“I think the SNB will continue interventions so long as pressure on the franc remains,” he said.
“I don’t think an interest rate cut is off the agenda, but with all the market uncertainty I am sceptical how it would alleviate the pressure on the franc.”
$1 = 0.9639 Swiss francs Reporting by John Revill; Editing by Michael Shields