Swiss central bank loses 10.8 bn francs

The Swiss National Bank reported Friday that it lost 10.8 billion francs (9.4 billion euros, $13.5 billion) in the first half of the year due mainly to the recent surge in the Swiss currency. "The appreciation of the Swiss franc against all major investment currencies resulted in substantial valuation losses," said the central bank in a statement. About 9.9 billion francs was lost on its foreign currency positions, as the US dollar depreciated by 9.6 percent, the yen by 8.9 percent and the euro by 2.4 percent against the Swiss currency over the first six months of the year. In addition, the central bank's gold holdings, which last year helped trim losses incurred on foreign currency positions, also posted losses this time. Although gold prices rose over the period, the dollar weakened to a larger extent against the franc, leading to an overall drop in price per kilogram of the precious metal to 40,799 francs from 42,289 francs. As a result, the national bank booked a loss of 1.6 billion francs on its gold holdings for the first six months of the year. The Swiss franc has appreciated sharply over recent months against the euro and dollar amid the eurozone and US debt crises. However, with lending rates already close to zero, the Swiss central bank has been unable to cut rates in order to cool interest in the safe haven currency.