Swiss Forex reserves little changed in September, suggests less aggressive intervention from SNB

Data released earlier today showed that Switzerland's Foreign Currency Reserves increased to CHF628bn in September from a revised CHF627bn the previous month. There has been a net increase from CHF542bn reported in September 2015 and CHF462bn the previous year.

The marginal increase in reserves for the September month suggests that the Switzerland National Bank (SNB) did not intervene aggressively to weaken the Swiss currency during September. This will increase speculation that there has been a weakening of underlying franc demand over the past few weeks.

That said, there are suspicions of intervention by SNB at the end of September to defend the Swiss franc. There was a sharp increase in domestic sight deposits in the week ending September 30. Domestic sight deposits rose by more than 8 billion CHF to 452.9 billion, the largest increase since the removal of the floor back in January 2015. And the latest actions would not have shown up in the data.

Last week, EUR/CHF dropped sharply towards the 1.08 level before bouncing to 1.0975, up 1.50 percent on the move. The pair was trading 0.1 percent lower on the day at 1.0923 at around 0900 GMT. USD/CHF traded above 0.9800.