UPDATE 1-SNB forex interventions hit eight-year high in 2020

(Recasts with central bank comment)

ZURICH, March 22 (Reuters) – The Swiss National Bank can further expand its balance sheet if necessary, the central bank said on Monday, after its annual report showed it ramping up its foreign currency interventions to 110 billion Swiss francs ($118.27 billion) during 2020.

The SNB’s spending on foreign currencies increased from 13.2 billion francs in 2019 and reached at its highest level since 2012 as it battled renewed upward pressure on the safe-haven franc during the COVID-19 pandemic.

The increased spending has inflated the SNB’s balance sheet close to 1 trillion francs – much larger than the size of the Swiss economy.

Still, despite reducing its interventions in the second half of the year, the size of the balance sheet would not deter the SNB from intervening in future, the central bank told Reuters.

“The SNB has sufficient scope for expanding its balance sheet further, should this be necessary for monetary policy reasons,” a spokesman said.

“Foreign exchange market interventions and the associated expansion of the balance sheet are currently a necessary monetary policy instrument and have nothing to do with currency manipulation.”

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