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Swiss central bank swells foreign currency reserves to record high

ZURICH: Switzerland’s central bank dramatically increased its foreign currency reserves last month as it moves to keep the heated franc from getting too strong, data released Wednesday showed.

The value of the Swiss National Bank’s foreign currency reserves soared in December by 33 billion Swiss francs ($32.6 billion, 27.5 billion euros), bringing the total reserve to a record 495.1 billion francs.

The bank has been struggling to hold down the value of the franc, which has been strengthening with the Russian ruble crisis sending investors scurrying to the safe haven currency.

The prospect of further stimulus measures by the European Central Bank has also been putting extra pressure on the franc.

SNB has vowed to buy “unlimited quantities” of foreign currencies to protect an exchange-rate floor of 1.20 francs to the euro it introduced in September 2011, as a strengthening franc was creating headaches for exporters.

Also in a bid to protect the floor, the bank announced on December 18 it would introduce negative interest rates for the first time in decades.

In addition to SNB’s purchasing of more foreign currency, a strengthening dollar also contributed to the increased value of the bank’s reserves.-AFP

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