IMF Data: SNB Forex Reserves and Gold in September 2012

It is released together with the international investment position, some monetary aggregates and the balance of payments two weeks after the data is established. It is transmitted to the International Monetary Fund and disclosed to the public. Again there is an archive. So one can compare the change from month to month.

Latest Data September 2012:

October 12, 2012: IMF Data

SNB Reserves End September (source)

In September FX reserves rose by 8.4 billion francs and gold holdings by 2.7 bln (by 5.1%). Gold holdings appreciated thanks to the price increase from 1691 US$ to 1768 US$ (by 4.5%) with a 1.2% weaker USD/CHF (from 0.9550 to 0.9430). This implies a total reserves increase of 11.3 bln. CHF.

SNB profits in September

The EUR/CHF appreciated from 1.2009 to 1.2084 (by 0.6%). Euro positions represent 60% of the SNB reserves, 262 bln. CHF. Therefore the euro price increase helped to achieve another 1.6 bln. profit. USD, JPY, GBP and CAD fell against the CHF by around 1%, resulting into 1 bln. CHF loss.

The last month seems to be a good month for the SNB. Gold and euro price gains help to achieve around 2.9 bln. francs profit on reserves only by FX (or gold) price changes.

Unfortunately, Swiss inflation rose by 0.3% MoM. When inflation rise too much, then the SNB must stop buying currency reserves. This questions if the profits are sustainable in the long-term or if the central bank needs to allow the franc to appreciate one day to stop inflation. Then they must realize losses.

Money Supply: the financing of the FX reserves

September

M0 (cash and deposits from local banks, see definitions here) increased by 10 bln. CHF in September. The M1 data is not yet available, they contain also “other deposits”, deposits from foreign bank and companies. Based on weekly monetary data, other deposits rose by 5 bln. francs. The total is higher than the increase in reserves. Therefore we reckon that the central bank has reduced loans to the Swiss confederation. As opposed to the SNB balance sheets, the IMF data includes swaps and repos in the FX reserves.

About George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

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