Swiss National Bank action on January 15 cost it CHF 41 billion

Are you still mad at the SNB for its surprise January 15 action?

While many in the Forex trading industry still harbor ill will toward the Swiss National Bank for deciding to surprisingly remove the implied 1.20 floor on the EURCHF, causing many large losses for many traders (and outsized gains for others) and putting some brokers such as Alpari UK and Liquid Markets out of business, the largest loss was actually realized by the SNB itself.

The SNB released its Q1 report today, revealing an overall CHF 30 billion ($31 billion) loss – CHF 29 billion from currency trading and CHF 1 billion from gold holdings.

On January 15 itself, the SNB took a CHF 41 billion ($42.5 billion) hit.

That’s a lot of money even for a central bank, representing a loss of more than $5,000 per capita for every man, woman and child in Switzerland.

The reason?

Well, remember that the SNB had spent the previous 3+ years buying Euros (and other currencies) and dumping CHF, in order to keep down the value of the CHF so that it didn’t rise above 1.20 in Euro terms. Their actions on January 15, causing the value of the CHF to spike up 20%+, cut the value of all the Euros they had accumulated, caused this very big loss for them, as measured in CHF terms.

To see the SNB’s Q1 report click here.

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