Swiss Franc Shocks Swiss National Bank With $50 Billion Loss

In January this year, Swiss National Bank shocked currency traders by unpegging Swiss Franc CHF from the Euro. Many brokers went belly up. Alpari UK filed for bankruptcy many other suffered millions of dollars of losses when CHF soared. Now this time, Swiss National Bank itself has been shocked by CHF when its soaring value gave it the first six months of this year a loss of $50 Billion.

The Swiss National Bank (SNB) revealed on Friday that abandoning its currency cap on the euro in January cost the central bank 50.1 billion Swiss francs ($52 billion) in the first half of the year.

In its interim earnings release, the central bank detailed the full extent of its balance sheet pain, as unlike most of its major counterparts, the SNB is privately run and has shareholders to report to like a regular company.

“(The) appreciation of the Swiss franc led to exchange rate-related losses on all investment currencies,” the SNB said in a news release on Friday.

Soaring CHF is now hurting Swiss economy. The continued strength of the Swiss franc is hurting exports from the country which are down 2.6% this year. The tourism industry has also reported fewer visitors and retailers are also struggling.

The first-half loss was almost entirely – 47.2bn francs – the result of losses on foreign exchange positions, which occurred in the weeks that immediately follow the bank’s decision to remove the currency peg against the euro.

Since ending the 1.20 francs per euro cap, the Swiss National Bank (SNB) has intervened in the currency market by buying euros to weaken the franc, which currently hovers at around 1.06 francs per euro.

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