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1/2 VIEW: Bank of America noted the following...>

SNB: 1/2 VIEW: Bank of America noted the following on Wednesday: "The headline
figures for Swiss FX reserves in March are misleading, in our view. : Our
analysis suggests the SNB's sizeable equity holdings are responsible for the
fall in March FX reserves. We estimate that the SNB spent CHF20bn to support
EUR/CHF through March. Our analysis also suggests that swings in SNB equity
holdings are having an increasingly larger impact on Swiss FX reserves. Weekly
sight deposit data suggest the pace of intervention is accelerating through
April. The latest data shows largest 4wk increase in deposits since the EUR/CHF
peg was disbanded in 2015. CHF appreciation has been a persistent theme since
2018. Historical correlations to risk metrics such as FX volatility seemingly
have broken down. This suggests a price insensitive buyer of CHF has been
present. Our a priori assumption is that central banks have been adding CHF to
reserve holdings which explains the strong correlation to gold over the past
year. CHF reserve holdings are back to their highest levels since Q3 2018. With
world uncertainty still elevated - we would expect continued CHF accumulation by
reserve managers..."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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