From Bloomberg comes the news that the Swiss are buying Australian dollars as a part of an explicit mercantilist strategy:
The Swiss central bank pledged to keep defending its franc cap and left borrowing costs at zero to protect the economy from “exceptionally high” risks as the euro area’s crisis intensifies.
…The central bank, which doesn’t disclose details of its market operations, introduced the ceiling in September after the franc’s surge to near parity with the euro raised deflation threats and eroded export competitiveness. Foreign-currency holdings rose to 303.8 billion francs ($316 billion) in May from 237.6 billion francs in April as the turmoil worsened.
Jordan, 49, said the SNB “will not tolerate” any further increase in the franc and “stands ready to take further measures at any time.”
“We’re obviously considering other measures” that could be used if there’s an “escalation of the crisis,” he said.
…Latest available data show the SNB has been reducing its euro exposure over the past two years. Euro holdings accounted for 51 percent of reserves at the end of the first quarter, down from 70 percent in the second quarter of 2010. Reserves of dollars rose to 28 percent from 22 percent in that period.
Jordan said the SNB added currencies such as Australian and Singapore dollars as well as Danish krone and Swedish krona in 2010 “to diversify its investments further.”
Under the circumstances, quite sensible by the Swiss.
