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FXstreet.com (Barcelona) - With pressure increasing on the EUR in recent months, primarily due to market uncertainty over the political future of the union, the demand for francs picked up. According to FX Strategist Andrew Salter, "In order to maintain the floor, the SNB took a large quantity of euros onto its balance sheet and subsequently converted them in to other foreign exchange reserves."

Indeed, the largest change in global foreign exchange reserves this year has come from the SNB. The build in reserves during May came, coincidentally, when market doubt as to the euro zone's future was at it highest. The consequences for the Australian dollar in particular have been profound.

The currency is trading well above where most fair value models would suggest. Respected commentators, both academic and commercial, have discussed the possibility of intervention in order to realign the currency with fundamentals, or to ease pressure from the domestic economy. "Our models suggest the departure from fundamentals is of the order of USD $0.10-15. As an aside, we think the chance of an overt intervention operation is low in the near term." he adds.

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