Swiss National Bank suffers record loss

The Swiss National Bank has suffered its worst quarterly loss since its foundation in 1907, after the impact of the coronavirus pandemic on global markets wiped SFr38.2bn ($39bn) from the value of its reserves in the first three months of the year, according to Financial Times.

Losses were mitigated by its huge gold pile of more than 1,000 tonnes, which rose in value by SFr2.8bn, as market panic drove up the price of the precious metal.

“The loss was not unexpected given the exposure of the SNB to global asset prices . . . but what was interesting today was the ability to get a better estimate on the scale of recent FX interventions by the SNB,” said Maxime Botteron, an economist at Credit Suisse.

He estimated that the SNB bought SFr27bn in foreign currencies in March — the most since January 2015.

The franc has steadily appreciated against the euro this year despite the SNB’s interventions, illustrating the extent to which the central bank is grappling with market forces as investors across the globe turn to haven assets during the turmoil wrought by the coronavirus pandemic.

Botteron’s calculations mean the SNB has purchased foreign currency assets equivalent to approximately 5.6 percent of Switzerland’s gross domestic product in the past three months, even as the value of its existing holdings plummeted.

Currently, the exchange rate of 1 euro equals 1.0526 Swiss franc. The franc has risen by over 3% since the beginning of this year.