Swiss central bank bought another 67.1 billion Sfr in FX in 2016

Swiss one franc coins are seen in this illustration picture taken in Zurich January 19, 2015. REUTERS/Arnd Wiegmann

ZURICH (Reuters) - Switzerland’s central bank bought another 67.1 billion Swiss francs (54.17 billion pounds) worth of foreign currencies in 2016, almost a quarter less than the previous year, in its effort to fight the appreciation of the safe-haven franc.

“These interventions occurred mainly at times of heightened uncertainty, when the Swiss franc was particularly sought after as a safe investment,” the Swiss National Bank said in its annual report published on Thursday.

Currency interventions and negative interest rates are the SNB’s main tools in its campaign to weaken the franc, which it has consistently described as “significantly overvalued”.

A strong franc complicates life for Switzerland’s exporters by making their products more expensive outside the country.

Interventions fell from 86.1 billion francs in 2015. The SNB intervened heavily at the start of 2015, when it abruptly removed its cap on the franc’s value against the euro.

As a result of the SNB’s foreign currency purchases, its balance sheet has ballooned to more than 740 billion francs, larger than the entire Swiss economy, raising concerns it could swing between big profits and losses in the future.

To safeguard against such swings, the SNB more than trebled to 4.6 billion francs the funds its sets aside as a cushion. Total provisions for currency reserves rose to 62.8 billion francs at year’s end.

The SNB is not required to make a profit, with its main mandate to ensure price stability in Switzerland. But a portion of any profit it does make is distributed to the Swiss government and the country’s 26 cantons.

Reporting by Joshua Franklin; Editing by Michael Shields