Swiss National Bank sees loss of $23 billion for 2015

GENEVA -- The Swiss National Bank says it expects to post a massive loss of 23 billion Swiss francs ($23 billion) for 2015, largely because of its decision a year ago to ditch a policy that limited the export-sapping rise of the national currency.

See Full Article

In a statement Friday, it said 20 billion francs of the loss was due to declines in the value of the bank's foreign currency holdings. A further 4 billion loss came from declining gold prices while a 1 billion gain emerged from holdings of Swiss currency holdings. Fuller details will be published on March in the central bank's annual report.

The disclosure reveals the cost of the SNB's decision on Jan. 15, 2015 to abandon the centerpiece of its monetary policy: pegging the franc to the euro to make sure it didn't rise too much.

The peg, which was introduced in Sept. 2011, was an attempt to halt the rise of the franc -- a traditional safe haven currency for investors -- against the euro at a time when the eurozone debt crisis was at its height. The strong franc was then particularly problematic for Swiss exporters, who were forced to drastically cut prices to remain competitive.

That policy was getting increasingly expensive to defend as the euro weakened in global markets amid growing expectations that the European Central Bank was preparing a massive stimulus program for the ailing 19-country eurozone economy. Such stimulus tends to weigh on a currency's value.

To defend the peg against a weakening euro, the SNB had to increasingly buy euros and sell the franc. But the cost of doing so became prohibitive. It finally ditched the peg in January, a week before the ECB announced its new stimulus.

The SNB's decision to call time on the policy saw the Swiss franc surge immediately on foreign exchange markets. Within minutes of the announcement, the franc spiked around a third against the euro and the dollar.

Though the franc drifted down from those heights over the course of 2015, it still ended the year around 10 per cent higher against the euro. That constituted the bulk of the SNB's loss. Against the dollar, it ended the year broadly flat as the U.S. currency appreciated strongly ahead of the Federal Reserve's widely expected decision in December to raise interest rates for the first time in nearly a decade.



Advertisements

Latest Economic News

  • Suncor CEO says more oilsands deals may appear in 'exodus' of foreign firms

    Economic CTV News
    CALGARY -- Suncor Energy (TSX:SU) has a potential opportunity to make further purchases in Alberta's oilsands if foreign multinationals continue to exit the sector, the oil and gas company's chief executive said Thursday. Suncor feels no pressure to buy but is watching closely for opportunities and has the financial strength to act, Suncor CEO Steve Williams said Thursday on a quarterly conference call with analysts. Source
  • Man removed from flight for using bathroom before takeoff

    Economic CTV News
    MILWAUKEE -- A Wisconsin man was removed from a Delta Air Lines flight after using the bathroom against crew instructions shortly before takeoff. Kima Hamilton says he urgently needed to use the bathroom April 18 while on a Milwaukee-bound plane in Atlanta. Source
  • European Central Bank says economy is 'increasingly solid'

    Economic CTV News
    FRANKFURT -- The European Central Bank kept its stimulus program and interest rates unchanged Thursday even though it conceded that the economy of the 19-country eurozone is becoming stronger. While indicators in recent weeks have pointed to much faster growth, there was little expectation the central bank would ease off its stimulus programs in the run-up to the second round of France's presidential election, in which anti-euro candidate Marine Le Pen is battling pro-EU front-runner Emmanuel…
  • N.B. mill taking 'time out' because of U.S. lumber tariffs

    Economic CTV News
    FREDERICTON - A New Brunswick sawmill owner says his mill is shutting down because of U.S. lumber tariffs. Danny Stillwell said Thursday he's taking "a time out," at least until a dispute over new tariffs is resolved. Source
  • Deutsche Bank executive says some 4,000 U.K. jobs could move

    Economic CTV News
    LONDON -- A key executive from Deutsche Bank has said nearly half of its 9,000 U.K.-based jobs could be shifted out of Britain because of Brexit as industry leaders express concern about the lack of clarity in the process. Source
  • Kia to invest $1.1 billion to build its first India factory

    Economic CTV News
    SEOUL, Korea, Republic Of -- Kia Motors Co. says it will invest $1.1 billion in India to build its first plant in the world's fifth-largest auto market. Kia said Friday that its factory in the state of Andhra Pradesh in India's southeast will be completed by late 2019 and produce up to 300,000 vehicles per year. Source
  • New McDonald's uniforms mocked for stark, modern look

    Economic CBC News
    McDonald's new uniforms for its U.S. locations are prompting some teasing online, with comments saying the grey-toned shirts and aprons make employees look like they're part of totalitarian regimes. Among the comparisons being made on social media to an image of the new uniforms: characters from Star Wars and The Hunger Games, and even the North Korean government. Source
  • Ford 1Q profit down on recalls, lower sales, but tops Street

    Economic CTV News
    DEARBORN, Mich. -- Ford Motor Co.'s net income fell 35 per cent to $1.6 billion in the first quarter as it was hit by costly recalls, lower sales and rising prices for steel and other materials. Source
  • Home Capital secures firm commitment for $2B line of credit

    Economic CTV News
    TORONTO - Home Capital Group Inc. (TSX:HCG) says its Home Trust subsidiary has secured a firm commitment for a $2-billion credit line from an unidentified Canadian institutional investor. The mortgage lender also says it has hired RBC Capital Markets and BMO Capital Markets to advise on further financing and strategic options. Source
  • Amazon releases Echo Look, a web-connected speaker and camera to help you dress yourself

    Economic CBC News
    The first versions of its voice activated Echo speakers still haven't been released in Canada, but technology giant Amazon is already unveiling a new model which includes a camera that can take pictures of its surroundings on command. Source