Reuters: US Dollar Report: Swiss sight deposits rise as euro fears intensify

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Swiss sight deposits rise as euro fears intensify May 29th 2012, 11:44 ZURICH | Tue May 29, 2012 7:44am EDT ZURICH May 29 (Reuters) - Swiss banks parked more cash at the country's central bank last week, data showed on Tuesday, a period when talk of a possible Greek exit from the euro zone put investors increasingly on the defensive. Sight deposits held at the Swiss National Bank by domestic banks rose to 171.655 billion Swiss francs ($179 billion) as of May 25 from 154.922 billion a week earlier, central bank data showed, a level not seen since January. The Swiss National Bank capped the franc's value at of 1.20 per euro in September, seeking to deter investors who want a haven from the euro crisis from driving the Swiss currency to levels that could trigger deflation and recession. Sight deposits are the accounts of commercial banks with the central bank, and constitute a large part of the liquidity in the banking system. As part of its efforts to weaken the franc, which nearly shot to parity with the euro last August, the SNB began flooding the money market with cash and raised total sight deposits to 200 billion. Total SNB sight deposits in francs amounted to 234.980 billion last week. The SNB's tools for expanding sight deposits are foreign exchange swaps and repurchases of its own debt. At its most recent policy review in March, the SNB said it would maintain liquidity at extraordinarily high levels. SNB data - particularly its foreign currency reserves - are closely scrutinised by investors for signs of how much it is costing to maintain the cap. In 2010 the SNB ran up huge losses due to its interventions to stem the franc's rise. Link this Share this Digg this Email Reprints

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