SNB reserves hit record on intervention Foreign currency reserves in Switzerland hit a fresh record high in June as the Swiss National Bank continued to intervene in the currency markets to stem the tide of foreign investors seeking havens from the eurozone. Reserves held at the Swiss National Bank rose to SFr365bn in June, a 20 per cent rise from the previous month's holdings, which were revised slightly upwards to SFr305bn. Analysts at Citigroup calculated that Swiss foreign-exchange reserves had risen from 42 per cent of gross domestic product to 63 per cent in the past two months as a result of currency interventions. The increase marked the second month in a row that the SNB has been forced to sell Swiss francs in large amounts and buy euros in order to hold the value of the franc against the euro at SFr1.20, the floor it has vowed to defend. In April, foreign currency holdings were just SFr238bn. Currency analysts said that the months of May and June marked the first time that Switzerland had intervened in the currency markets in any significant size since it first set the floor for the franc in September, in a bid to boost its economy by helping ailing exporters. Separate data showed that Switzerland was continuing to experience deflation, with the CPI falling more than expected in June, by 0.3 per cent month-on-month, and falling 1.1 per cent on an annualised basis. Analysts said the fall in inflation would make the SNB even more determined to hold the floor. "The softer than expected CPI print today could strengthen [the] SNB's resolve to defend the peg with utmost determination," said analysts at Citigroup. The deflationary environment was also a sign that the effect of expanding its balance sheet was not feeding through to the wider economy and causing inflation, analysts said. "For us, the 1.20 floor remains 100 per cent credible," said Geoffrey Kendrick, foreign currency analyst at Nomura. Today's CPI data confirms there is no pass-through from the increase in the money base, which accompanies FX intervention, to inflation.