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Central bank dramatically boosts currency reserves

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Central bank dramatically boosts currency reserves
Photo: Malcolm Curtis/The Local
14:05 CET+01:00
Switzerland's central bank dramatically increased its foreign currency reserves last month as it moves to keep the heated franc from getting too strong, figures released on Wednesday showed.

The value of the Swiss National Bank's foreign currency reserves soared in December by 33 billion Swiss francs ($32.6 billion), 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 18th it would introduce negative interest rates for the first time in decades.
   
In addition to SNB's purchasing of more foreign currency, a strengthening American dollar also contributed to the increased value of the bank's reserves.

While the Swiss currency remains strong against the euro, its has lost value against the US dollar, which last week exceeded parity with the Swiss franc for the first time since late November 2010.

In midday trading on Wednesday the dollar was fetching 1.01 francs.

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