Geneva - The Swiss National Bank reported Friday a 8.5 billion franc (8.71 billion dollar) loss in the first nine months of 2010, citing exchange rate losses as the chief factor. However, earnings on foreign currency investments and valuation gains on gold and the UBS stabilisation fund 'all had a positive impact on the result,' the SNB said in a statement. It noted also that risks from the stabilisation fund, set up to support banking giant UBS in 2008 when the crisis-hit bank needed a bailout, were declining in the first three quarters this year. The appreciation of Switzerland's currency this year, owing to its status as a safe haven and the impact of monetary policy decisions in other countries, led to exchange rate losses totaling 21.2 billion francs, data showed. Central bankers have warned as recently as last week that they were ready to act if the rising franc would cause deflationary risks. Already there are predictions that Swiss inflation could turn negative for a brief period next year. The SNB earlier this year made market interventions to weaken the franc versus the euro, but in June stopped purchasing foreign currencies, saying deflation risks have 'largely disappeared,' though economic conditions have since changed once again. Regarding its gold, the bank said it holds 1,040 tonnes of the precious metal in the form of currency reserves and made 4.6 billion francs in valuation gains this year, as the price of gold has skyrocketed.

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