The Swiss central bank posted an even bigger loss for the first quarter than expected. The huge book losses are an indication of how exposed the monetary authority has become to foreign stock markets.
The first-quarter loss of the Swiss National Bank (SNB) came in at 38.2 billion Swiss francs ($39.2 billion), substantially more than the 30 billion predicted by UBS earlier this week.
Coronavirus-Effect
The underlying reason for the losses is the spread of the coronavirus and stock market crash the followed in its wake in March. The measures taken to contain the pandemic seriously impacted the financial markets from mid-quarter onwards, and accordingly also the SNB’s result, it said in a statement on Thursday.
The loss on the foreign currency positions amounted to 41.2 billion francs. The crash of the stock market led to a loss of 31.9 billion francs on equity securities and instruments. Exchange rate-related losses totaled 17.1 billion.
Gold Price Increase Helped
The rise in the price of gold helped the bank narrow the loss. A kilogram of gold increased to 49,923 francs at the end of March from 47,222 francs at the end of 2019, giving the bank a valuation gain of 2.8 billion francs.
The SNB’s equity dropped from 167 billion francs to 128.8 billion francs over the course of the three months through March.
