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The SNB reserves expand to record
The Swiss National Bank’s official reserves increased to a record high of 550.9bn francs in October from 541.5bn.

Attempts to stabilise the Swiss franc against the US dollar and the euro in Q by the SNB may well be reaching an impasse. The ECB is by all accounts moving toward a more unorthodox monetary policy by December and the SNB can do nothing but adjust its own monetary policy and its budget via riskier investment portfolio and lower rates.

The negative rates have proven to be efficient in diminishing demand in franc. However the renewed weakness in euro will increasingly weigh on SNB’s budget. The euroswiss rate futures hint that the expectation for more negative Swiss rates are now being priced in.

The SNB will need to spend more to keep the EURCHF within 1.08/1.10 range. The SNB will almost certainly succeed in keeping the cross within the 1.05/1.10 target band to the end of the year, yet at an increasingly higher expense.